2024 (3) TMI 125 - AT - Central Excise

Rebate claim for the duty paid on export of goods - part rejection of rebate on the ground that this amount is not eligible as credit for the reason that the appellant has not maintained separate accounts for the common input services used for exempted and dutiable goods - suppression of facts or not - invocation of Extended period of limitation - HELD THAT - The Show Cause Notice dated 01.03.2013 has been issued for the period September 2010 to April 2011 invoking the extended period. In Paragraph 14 of the Order-in-Original, the Adjudicating Authority has observed that the conduct of the assessee in maintaining separate accounts for inputs and not maintaining separate accounts for input services commonly used for dutiable and exempted goods is a pre-planned action for evasion of duty - this view cannot be agreed upon. Whatever be the reason given by the appellant for not maintaining separate accounts in regard to input services, it is to be seen that the Department was aware of this fact - The appellant has disclosed the availment of credit in ER-1 returns. When Department had issued Show Cause Notice dated 04.04.2012 on the same allegation of availing wrong credit, the subsequent Show Cause Notice invoking extended period is not sustainable. The Department ought not to have waited for the rebate proceedings to get finalized and ought to have issued Show Cause Notice within the normal period. There is absolutely no suppression of facts established against the appellant. The invocation of extended period is not sustainable. The Show Cause Notice is time barred. The appellant succeeds on limitation - Appeal allowed.

Summary

Issues:
The judgment involves issues related to the rejection of rebate claim, eligibility for rebate, wrongful availment of credit, imposition of penalties, maintenance of separate accounts for input services, and the invocation of the extended period for recovery.

Rejection of Rebate Claim:
The appellant, engaged in manufacturing polyester cotton yarn, filed a rebate claim for duty paid on exports. The Department rejected a part of the claim due to the appellant not maintaining separate accounts for common input services used for exempted and dutiable goods. The Commissioner (Appeals) later held that the rejection of the rebate claim cannot be sustained, stating that the eligibility of credit cannot be disputed in a rebate claim.

Wrongful Availment of Credit and Penalties:
The Department issued a Show Cause Notice alleging wrongful availment of credit and proposed recovery along with interest and penalties. The Original Authority confirmed the demand, interest, and penalties. The appellant argued that the disallowance of credit was without legal basis, as there was no restriction on availing credit on input services under the relevant notification.

Maintenance of Separate Accounts and Extended Period:
The appellant maintained separate accounts for inputs but not for commonly used input services, as there was no restriction on availing CENVAT Credit on input services. The Tribunal held that the Department was aware of this fact, as evidenced by an earlier Show Cause Notice. The invocation of the extended period for recovery was deemed time-barred, as there was no suppression of facts by the appellant.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any, as per law. The judgment highlighted the importance of maintaining separate accounts for input services and clarified the eligibility for rebate claims under the relevant provisions of the CENVAT Credit Rules, 2004.