2022 (12) TMI 971 - AT - Central Excise

Recovery of CENVAT Credit - mis-declaration of material facts with intent to evade payment of Central Excise Duty - extended period of limitation - HELD THAT - It is very clear that the appellant had clearly mentioned that though the credit was taken by mistake belatedly, the credit was not availed by the Mill. This fact has been very conveniently ignored by the Adjudicating Authority who has chosen to incorporate at paragraph 5 of the Order-in-Original only the first portion as to the availment by mistake of credit and the non-reversal of the same. Thus, when the credit itself was not taken / availed by the appellant, there is no scope whatsoever to allege wilful or deliberate intention to evade duty. Unfortunately, the First Appellate Authority has also ignored the plea of the appellant, by upholding the findings of the Adjudicating Authority. The demand of duty by invoking the extended period cannot sustain as the Revenue has not been able to justify the same and therefore, the demand, as confirmed in the impugned order, cannot be sustained. When the demand itself cannot be sustained, the penalty imposed also cannot be sustained for the same reason and consequently, the impugned order to this extent cannot be sustained. Appeal allowed.

Summary

Issues: Alleged wrongful availing of CENVAT Credit, applicability of Rule 14 of CENVAT Credit Rules, 2004, extended period of recovery, deliberate intention to evade duty, appeal against Order-in-Original, plea of the appellant, relevance of co-ordinate Ahmedabad Bench order, sustainability of demand and penalty, consequential benefits.

The judgment pertains to a case where the appellant, a manufacturer of sugar and molasses, was alleged to have wrongly availed CENVAT Credit amounting to Rs.19,86,201 during the period from March 2016 to June 2017. The Show Cause Notice accused the appellant of mis-declaring material facts to evade payment of Central Excise Duty, seeking recovery of the credit under Rule 14 of the CENVAT Credit Rules, 2004, along with interest and penalty. The appellant responded by explaining that the credit was mistakenly taken due to the closure of their mill and was not utilized, thus denying any deliberate intention to evade duty.

The Adjudicating Authority confirmed the demands in the Show Cause Notice, leading to an appeal before the First Appellate Authority. The latter partially ruled in favor of the appellant by deleting the interest charged under Rule 14(1)(i) of the CCR, 2004. However, the First Appellate Authority noted that the appellant's argument regarding non-utilization of the credit was not raised earlier. Despite this, the Revenue did not challenge the deletion of interest.

Upon review, the appellate tribunal found that the appellant's plea regarding the non-availment of the credit was crucial and had been overlooked by the lower authorities. Citing a relevant precedent, the tribunal emphasized that the demand invoking the extended recovery period was unjustified. Consequently, the tribunal set aside the impugned order, ruling that the demand and penalty could not be sustained in the absence of a valid justification for the extended recovery period.

In conclusion, the tribunal allowed the appeal, providing consequential benefits as per the law. The judgment highlighted the importance of considering all aspects of a case, including the appellant's submissions and relevant legal precedents, to ensure a fair and just decision regarding the alleged wrongful availing of CENVAT Credit and the imposition of penalties.