2024 (3) TMI 124 - AT - Central Excise

Principles of Res-judicata - Invocation of Extended period of Limitation - Recovery of illegally availed CENVAT Credit with interest and penalty - earlier SCN was withdrawn and second SCN issued for the recovery - HELD THAT - There are no substance in the argument of the learned advocate for the appellant in as much as the first show-cause notice had not been decided confirming the allegations and the demand proposed therein and not resulted in an appealable order. During the pendency of the adjudication of the said show-cause notice, another show-cause notice was issued by the Commissioner correcting the computation error in the first show-cause notice and a higher demand has been proposed. However, there are substance in the argument of the learned advocate for the appellant that since in the first show-cause notice extended period of limitation has been invoked and stating the same set of facts which has been repeated in the second show-cause notice for invoking extended period of limitation, cannot be sustained in view of the judgment of the Hon ble Supreme Court in NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP 2006 (4) TMI 127 - SUPREME COURT . The matter is remanded to the Commissioner to restrict the adjudication of demand to normal period of limitation - Appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in this case are the wrongful availing of CENVAT credit by the appellant, the issuance of two show-cause notices on the same issue, the invocation of extended period of limitation, and the correctness of the demand computation.

Wrongful Availing of CENVAT Credit:
The appellant was engaged in the manufacture of excisable goods and had availed CENVAT credit on inputs received from an Export Oriented Unit (EOU). Show-cause notices were issued alleging the wrongful availing of credit, with varying amounts, for different periods. The demand was confirmed with interest and penalty under relevant rules and acts.

Two Show-Cause Notices:
The appellant's advocate argued that two show-cause notices were issued on the same issue, involving extended periods of limitation. The first notice was withdrawn by the Commissioner after revising the method of demand computation. The second notice alleged a higher demand, leading to a challenge on the legality of issuing a second notice before the adjudication of the first.

Extended Period of Limitation:
The appellant contended that invoking extended periods of limitation in both show-cause notices, based on the same facts, was unsustainable. Reference was made to legal precedents to support the argument that the second notice was not valid due to the principles established by the Hon'ble Supreme Court.

Correctness of Demand Computation:
The Commissioner issued a second show-cause notice correcting the computation error in the first notice. The Tribunal found that while the second notice was permissible, the invocation of extended periods of limitation based on the same facts as the first notice was not in accordance with legal principles. The impugned order was set aside, and the matter was remanded for adjudication on merit within the normal period of limitation, ensuring the principles of natural justice were observed.