2024 (4) TMI 818 - AT - Central Excise

Invocation of Extended period of Limitation - denial of N/N.12/2012-CE dated 17.03.2012 - Solar Inverters - Combiner Box / Array Guard - PV Logs and parts - HELD THAT - In the present case, the appellant has challenged the confirmation of demand invoking extended period of limitation advancing the argument that all the facts have been disclosed to the Department through their ER-1 Returns and hence suppression of facts cannot be invoked against them. It is found that the appellants are engaged in the manufacture of parts of Solar Power Generating System viz. Solar Inverters, Combiner Box / Array Guard and PV Logs. But on going through one of the sample ER-1 return, filed with the Department, for the period February 2014, it is found that under the heading Description of Goods , the item is mentioned as power , ELE , Solar . Thus, there is no correct declaration of the description of the goods mentioned in the ER-1 Returns which have been manufactured and cleared by them by raising invoices mentioning a different description. The mis-declaration of the description of the goods would invite extended period of limitation in view of the judgment of the Hon ble Supreme Court in the case of COMMR. OF CEN. EXC. AHMEDABAD VERSUS URMIN PRODUCTS P. LTD. AND OTHERS 2023 (10) TMI 1112 - SUPREME COURT . The order of the learned Commissioner denying the benefit of exemption under Notification No.12/2012-CE dated 17.03.2012 and confirming the demand invoking extended period has been upheld. However, even though the appellant had deposited the amount in August 2014, which has been appropriated in the impugned order passed in February 2016, the interest liability has not been calculated and mentioned in the order; therefore, the reduction of penalty to 25% as per Section 11AC(1)(c) could not have been availed by the appellant. Thus, the appellant be given a fair chance by communicating the quantum of interest payable and in the event the appellant discharges the interest amount within 30 days from the date of communication of the amount, the benefit of reduced penalty of 25% under Section 11AC(1)(c) may be extended. Appeal disposed off.

Summary

Issues Involved:

1. Eligibility for exemption under Notification No.12/2012-CE dated 17.03.2012.
2. Invocation of extended period of limitation for demand confirmation.
3. Calculation and communication of interest liability and penalty reduction under Section 11AC(1)(c).

Summary:

1. Eligibility for Exemption under Notification No.12/2012-CE:

The appellants, engaged in manufacturing Telecom Power Supply System Assembly, Power Controllers, and solar inverters, availed exemption u/s Notification No.12/2012-CE dated 17.03.2012. The Department alleged that the items manufactured were parts of the Solar Power Generating System and not eligible for the exemption, leading to a demand of Rs.10,00,32,771/- along with interest and penalty. The Tribunal referenced the Principal Bench's judgment in Raydean Industries, which clarified that parts of Solar Power Generating System are not eligible for the exemption unless consumed within the factory of production. Therefore, the parts manufactured by the appellant were not eligible for the exemption under Notification No.12/2012-CE.

2. Invocation of Extended Period of Limitation:

The appellant argued that the show-cause notice was barred by limitation, citing no wilful suppression of facts and bona fide belief in eligibility for exemption. However, the Tribunal found that the appellant mis-declared the description of goods in their ER-1 returns, which amounted to suppression of facts with intent to evade duty. The Tribunal upheld the invocation of the extended period of limitation, referencing the Supreme Court judgment in CCE, Ahmedabad Vs. Urmin Products P. Ltd. & others.

3. Calculation and Communication of Interest Liability and Penalty Reduction:

The Tribunal noted that although the appellant deposited the duty amount in August 2014, the interest liability was not calculated in the impugned order. Consequently, the appellant could not avail the reduced penalty of 25% under Section 11AC(1)(c). The Tribunal directed that the interest amount be communicated to the appellant, and if paid within 30 days, the benefit of reduced penalty should be extended.

Conclusion:

The Tribunal upheld the order denying the exemption under Notification No.12/2012-CE and confirming the demand with the extended period of limitation. The appeal was disposed of with a modification to allow the appellant a fair chance to pay the interest and avail the reduced penalty.