2021 (8) TMI 127 - AT - Central Excise

Invocation of extended period of limitation - CENVAT Credit - inputs - let export services - rail freight BL charges - destination delivery charges - detention charges - WCT services - rent a cab service - construction services - whether the department has rightly invoked the extended period of five years, while making the demand for the period September, 2013 to August, 2016 vide Show cause notice dated 21.7.2017? - Penalty - HELD THAT - As per section 11A of Central Excise Act as was applicable at the time of issue of impugned show cause notice, the notice would have been served within 2 years of noticing of short comings on the part of assessee. However sub section 4 thereof extend the said period to that of five years in case it is observed that duty has not been paid or short paid or erroneously refunded by reason of fraud collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty. Reverting to the facts of the present case, apparently and admittedly there was no disclosure on the part of appellant to the Department informing the availment of CENVAT Credit post let export order. The information was given only after it was demanded by the Department post audit of the appellant records. No doubt there is no provision in the CENVAT Credit Rules for disclosing the particulars of import service on which CENVAT Credit is availed by the manufacturer nor there is any column in ER / ERI /ST 3 return to indicate various input service in respect of which CENVAT Credit is taken but since system is based on self assessment scheme, the particular opportunity as prescribed Performa of return to be filed by the assessee - there are no infirmity in the findings of Commissioner (Appeals) that being a private limited company engaged in the manufacture / export of motor vehicle parts and availed CENVAT Credit since long is supposed to have knowledge of law and procedure laid down with regard to availment of CENVAT Credit, ignorance of law otherwise is not a defense available. Penalty - HELD THAT - The appellant wrongly took the CENVAT Credit on the services which were not eligible import service. Over and above, there is apparent admission of the appellant that the credit availed has been wrong. Such case is definitively a case of suppression of facts that too with intention to evade payment of duty - there are no infirmity in the order under challenge where the penalty for the period April, 2013 to August, 2016 has been imposed upon the appellant. Appeal dismissed.

Summary

Issues:
1. Wrong availment of Cenvat Credit on services related to export of goods.
2. Allegation of wrongly availing input Cenvat Credit on various services.
3. Imposition of penalty and interest by the Department.
4. Appellant's challenge against the penalty imposition.
5. Application of the extended period of limitation by the Department.
6. Interpretation of provisions under Section 11A of the Central Excise Act.
7. Disclosure requirements for availing Cenvat Credit.
8. Assessment of suppression of facts with intent to evade payment of duty.
9. Justification of penalty imposition based on judicial precedents.
10. Upholding of the penalty imposition in the order under challenge.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi involved two appeals arising from a common Order in Appeal. The appellant, engaged in manufacturing motor vehicle parts, was found to have wrongly availed Cenvat Credit on services related to export activities and various other services. The Department alleged that the appellant had availed credits amounting to a significant sum, leading to the issuance of a show cause notice proposing reversal of credits, interest, and penalty. The subsequent Order-in-Original confirmed the proposal, which was challenged by the appellant.

The appellant contended that they had already reversed the Cenvat Credit before the show cause notice was issued, questioning the imposition of penalty. The appellant argued against the invocation of the extended period of limitation, citing no suppression of facts to evade duty payment. On the other hand, the Department justified the penalty imposition based on findings of suppression against the appellant.

The Tribunal analyzed the case, focusing on the reversal of Cenvat Credit, the invocation of the extended period of five years by the Department, and the provisions of Section 11A of the Central Excise Act. It was observed that the appellant had not disclosed the availment of Cenvat Credit to the Department until after an audit, indicating a lack of compliance with self-assessment requirements. The Tribunal endorsed the Commissioner's findings that the appellant, being knowledgeable about Cenvat Credit rules, should have rectified any wrong availments promptly.

Relying on a decision of the Hon'ble High Court of Allahabad, the Tribunal upheld the penalty imposition, considering the appellant's admission of wrongly availing credits as a case of suppression with intent to evade duty payment. Consequently, the Tribunal dismissed both appeals, affirming the penalty imposition for the specified period. The judgment emphasized the importance of compliance with legal requirements and timely rectification of irregularities to avoid penalties and legal consequences.