2023 (11) TMI 818 - AT - Central Excise

Time limitation - non-inclusion of entire input stock for the purpose of expunging the credit during transition from duty paying unit to the SSI unit - HELD THAT - The appellant had disclosed the purchase of raw materials after 15.3.2007 in their excise records and also in the cenvat registers. It is submitted by the learned counsel that they had not included this in the closing stock on the understanding that the only the credit availed by them upto the last clearance is to be expunged. On being pointed out by department they have immediately accepted the demand and paid the amount at the time of filing the appeal. Taking note of the fact that the appellant is not contesting this amount admitted by them and as these invoices have been reflected in their ER.1 returns, it is found that it is a bonafide mistake on the part of the appellant that these invoices were not included in the closing stock. The demand raised beyond the normal period cannot sustain. Assessee succeeds on the ground of limitation. However, as the liability to the tune of Rs.1,38,141/- is admitted and not contested in this appeal, the same is upheld along with interest. The impugned order is modified to the extent of upholding the demand of Rs.1,38,441/- along with interest and setting aside the remaining demand interest and penalties. The penalty in regard to Rs.1,38,441/- is also set aside - Appeal allowed in part.

Summary

Issues involved:
- Availing of CENVAT credit and exemption under Notification No. 8/2003-CE
- Calculation of duty on closing stock of raw materials and finished goods
- Allegation of wrongly availed CENVAT credit and penalty imposition
- Contestation of closing stock details and demand of duty
- Suppression of facts with intent to evade payment of duty
- Grounds of limitation for demand of duty

Issue 1: Availing of CENVAT credit and exemption under Notification No. 8/2003-CE
The appellant, engaged in manufacturing scaffolding equipment, opted for full exemption under Notification No. 8/2003-CE from 1.4.2007, after initially availing CENVAT credit on inputs. The appellant intimated the department about expunging the balance CENVAT credit on inputs as of 31.03.2007.

Issue 2: Calculation of duty on closing stock of raw materials and finished goods
The department calculated duty on the closing stock of raw materials and finished goods as per Rule 11 of the Cenvat Credit Rules, 2004, based on the value of inputs contained in the finished goods. A show cause notice was issued to demand the wrongly availed CENVAT credit and penalty was imposed by the original authority, upheld by the Commissioner (Appeals).

Issue 3: Allegation of wrongly availed CENVAT credit and penalty imposition
The appellant had reversed a portion of the CENVAT credit but did not pay the balance credit attributable to the raw materials and finished goods in stock as of 31.03.2007. The demand for the wrongly availed credit and penalty was confirmed by the original authority and Commissioner (Appeals).

Issue 4: Contestation of closing stock details and demand of duty
The appellant contested the department's allegation that the closing stock details were inaccurate, arguing that the department's calculation of input stock beyond admitted invoices lacked evidence. The appellant accepted the liability for certain invoices but disputed the department's assumptions regarding additional input stock.

Issue 5: Suppression of facts with intent to evade payment of duty
The department alleged suppression of facts by the appellant, citing invoices not included in the closing stock declaration. The appellant argued that there was no intent to evade payment of duty, as the invoices were accounted for in their books and were a bonafide mistake in not including them in the closing stock.

Issue 6: Grounds of limitation for demand of duty
The appellant contended that there was no suppression of facts warranting the extended period for demand of duty. The appellant maintained that the demand beyond the normal period was not justified, as they had promptly paid the admitted liability upon notification by the department.

This summary provides a detailed breakdown of the legal judgment, highlighting the key issues involved and the arguments presented by both parties.