2021 (10) TMI 700 - AT - Central Excise

CENVAT Credit - Additional duty of Customs (SAD) - credit as per the amount shown in the Bill of Entry, correct or not - excess receipt of raw material volatile in nature - amount of CVD in the bill of entry, is a lower amount - extended period of limitation - HELD THAT - The appellant is registered with the Department and have maintained proper books of accounts and registers. The issue involved herein is wholly interpretational in nature. Further, the show cause notice is also erroneous, as revenue have sought to recover an amount of ₹ 1,04, 890 ₹ 7,18,818/- which are been finally dropped by the court below. Further, this Tribunal found that the demand of ₹ 25,705/- is not sustainable and the same have been raised by misconception, as regards treatment of normal loss. Taking of lesser credit due to normal loss - also receipt of marginally excess quantity than that mentioned in the invoices/bill of entry - HELD THAT - There is no Mala fide on the part of the appellant as they have taken less credit in case of normal loss of the quantity, and have erroneously taken excess credit for the normal gain or excess quantity received. Extended period of limitation is not available to revenue. The impugned order in appeal is set aside so far it have confirmed the demand and penalty - Appeal allowed in part.

Summary

Issues Involved:
1. Whether Cenvat credit of Additional duty of Customs (SAD) has been rightly taken as per the amount shown in the 'Bill of Entry'.
2. Whether Cenvat credit of ?65,660/- has been rightly taken on excess receipt of raw material (volatile in nature), whereas the amount of CVD in the bill of entry is lower.
3. Whether the show cause notice is for invocation of extended period of limitation.

Issue-wise Detailed Analysis:

1. Whether Cenvat credit of Additional duty of Customs (SAD) has been rightly taken as per the amount shown in the 'Bill of Entry':
The appellant argued that they have taken the credit of additional duty as per the invoice/bill of entry. The raw material in question was a volatile chemical, leading to normal transit losses. The revenue's demand for proportionate credit based on actual quantity received was deemed unjustified. The appellant cited the case of 'Union of India versus Wheelbarrow Spearing Ltd' where the court ruled that marginal losses due to transit or evaporation should not reduce the modvat credit. The Tribunal agreed with this view, setting aside the demand of ?25,705, acknowledging that the appellant is entitled to full credit based on the duty paid as evidenced by the invoices.

2. Whether Cenvat credit of ?65,660/- has been rightly taken on excess receipt of raw material (volatile in nature), whereas the amount of CVD in the bill of entry is lower:
The appellant contended that they took proportionate credit for both lesser and excess quantities received due to normal transit variations. The revenue did not object to lesser credit for short receipts; thus, they should not object to excess credit for marginally higher receipts. The Tribunal found that the issue was interpretational and not due to any malafide intent. Consequently, the demand of ?65,660 was set aside, recognizing the appellant's practice of proportionate credit as legitimate.

3. Whether the show cause notice is for invocation of extended period of limitation:
The Tribunal noted that the appellant maintained proper books and regularly filed returns. The issues raised were interpretational, with no malafide intent attributed. The show cause notice aimed to recover amounts that were ultimately dropped by the lower courts. The Tribunal held that the extended period of limitation was not applicable, as the appellant's actions were not fraudulent but based on a reasonable interpretation of the law. Thus, the impugned order confirming the demand and penalty was set aside.

Conclusion:
The Tribunal allowed the appeal, modifying the impugned order-in-appeal. The appellant was entitled to consequential benefits in accordance with the law, recognizing the interpretational nature of the issues and the absence of malafide intent. The orders demanding recovery and imposing penalties were set aside, providing relief to the appellant.