Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2022 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (10) TMI 56 - AT - Central ExciseScope of SCN - time limitation - Disallowance of transitional Modvat credit - Levy of penalty upheld - invocation of extended period of limitation to deny Modvat credit for contravention of provisions of Rules 57H(1)(b), 57G, 173G and 173B of the Central Excise Rules, 1944 - suppression of facts or not - HELD THAT - The Ld. Joint Commissioner has observed that the assessee has suppressed the fact of availing the benefit of SSI exemption under Notification No. 1/93-CE by not paying the duty on finished goods during the period in dispute i.e. 1994-95, which allegation was not made in the SCN dated 02.04.1996 and, therefore, the proceedings have travelled clearly beyond the scope of allegations made in the SCN which cannot be legally sustained. The main reason that has been assigned to disallow the credit in the impugned order is that the Appellant has availed the aforesaid SSI exemption which was never alleged in the SCN. The Department was aware of the fact with regard to the availment of above exemption since that has been duly disclosed in the quarterly excise returns, though belatedly filed, and hence the same was within the knowledge of the Department at the time of issuance of the SCN. It is a settled legal position that when the assessee was not put to notice with regard to the reasons basis which the demand is being sought to be made, the proceedings cannot be legally sustained. Hence, the demand is liable to be quashed on this ground alone. Time Limitation - HELD THAT - The very basis of invocation of extended period of limitation is the alleged wrong availment of exemption notification, which also cannot be sustained when no such allegation was ever made in the SCN - the only allegation in the SCN was with regard to availment of transitional credit of Modvat in terms of Rules 57G and 57H. Both the Authorities below have duly noted that the required declaration under Rule 57G was duly filed by the assessee on 20.12.1994 wherein the assessee communicated its intention to avail the said credit which facts are not in dispute. Moreover, declaration under Rule 57H has also admittedly been submitted on 19.09.1995 which is on record - the authorities below have erred in invoking the extended period of limitation. The duty demand cannot be legally sustained, the same is set aside - Appeal allowed - decided in favor of appellant.
Issues:
1. Eligibility to avail transitional Modvat credit. 2. Legality of proceedings initiated through the Show Cause Notice (SCN). Eligibility to avail transitional Modvat credit: The case involved the Appellant, M/s. Ronix Polymer Private Limited, challenging the disallowance of Modvat credit and imposition of a penalty. The dispute dated back to the period 1994-95 and had undergone multiple rounds of litigation. The Appellant obtained registration with the Central Excise Department and filed necessary declarations for availing transitional Modvat credit. However, issues arose regarding the timeliness of filing returns and declarations. The original adjudication resulted in a demand confirmation, which was subsequently upheld in various appeal stages. The matter was remanded for fresh adjudication due to lack of clarity on crucial dates and facts. In the final decision, the Tribunal found that the proceedings had exceeded the scope of the allegations made in the SCN. The demand was based on the alleged wrongful availment of an SSI exemption, which was not part of the original SCN. As per legal principles, when the assessee is not properly notified of the reasons for the demand, the proceedings cannot be sustained. Consequently, the demand was quashed on this ground alone. The Tribunal also noted that the invocation of the extended period of limitation was unfounded, as the necessary declarations for Modvat credit had been duly filed by the Appellant. Therefore, the duty demand was set aside, and the appeal was allowed with consequential relief. Legality of proceedings initiated through the Show Cause Notice (SCN): The Tribunal scrutinized the impugned adjudication order and found that the allegations made in the SCN did not align with the basis for disallowing the Modvat credit. The Department had accused the Appellant of availing an SSI exemption, a fact not included in the original SCN. Despite the disclosure of this exemption in the quarterly excise returns, the Department failed to raise it as an issue in the SCN. The Tribunal emphasized that legal proceedings must be based on the allegations put forth in the notice to the assessee. In this case, since the demand was not in line with the SCN, it could not be legally sustained. Furthermore, the invocation of the extended period of limitation was deemed unjustified as it was linked to an allegation not raised in the SCN. The Tribunal reiterated that compliance with statutory requirements, such as filing the necessary declarations for Modvat credit, should be duly recognized. Ultimately, the Tribunal ruled in favor of the Appellant, setting aside the duty demand and providing relief in accordance with the law. ---
|