2024 (4) TMI 1008 - AT - Central Excise

Recovery of amount of CENVAT Credit short reversed/not paid by the Noticee alongwith interest and penalty - exempt goods or not - benefit under Notification No. 12/2012-CE dated 17.03.2012 (Sr. No. 179) - assessment in case two options available - revenue neutrality - Extended period of Limitation - HELD THAT - The amount of CENVAT credit available on the inputs and the amount which needs to be paid as duty on the final products cannot determine whether the goods are dutiable or exempted. If, duty is paid, even if it is one rupee, the goods are duty paid and it is immaterial how much, if any, CENVAT credit on inputs or input services was available. Therefore, the goods cleared by the appellant claiming the benefit of Notification No. 12/2012-CE (Sr. No. 179) are clearly exempted goods as the appellant had claimed the benefit of exemption notification and should have been considered as such while calculating the amount of CENVAT credit to be reversed under rule 6(3A) of CCR. The alternative submission of the appellant is that it can now re-assess the duty, forego the exemption notification 12/2012-CE, and claim CENVAT credit of the duty paid on its inputs - HELD THAT - It is true, that if more than one options are available, the assessee can choose what is most beneficial to it. If it chooses wisely, it will gain and if it does not choose wisely, it will lose. In this case the appellant had made the choice while self-assessing the duty. Assessment including self-assessment is appealable before the Commissioner (Appeals) and there is nothing on record to indicate that the appellant had appealed against its assessment - the contention of the appellant cannot be accepted. In ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV 2019 (9) TMI 802 - SUPREME COURT the Constitution Bench of the Supreme Court held that all assessments, including self assessment, can be assailed before the Commissioner (Appeals). There are no provision under which the assessee can retrospectively revise its own self-assessment. Revenue neutrality - HELD THAT - The concept of revenue neutrality was only brought in through a series of judicial pronouncements for the limited purpose of determining if the assessee could have had an intention to evade to justify invoking extended period of limitation while raising the demand under section 11A. The settled legal position is that if the entire exercise is otherwise revenue neutral, the assessee could not have had any intention to evade and, therefore, extended period of limitation cannot be invoked. So far as the normal period of limitation is concerned, revenue neutrality or even revenue negativity makes no difference to the application of the provisions of the law. Extended period of limitation - HELD THAT - It is for the department to prove that one of the elements required to invoke the extended period of limitation were present in the case. It makes no difference if the assessee is operating under self-assessment as every assessee operates by self-assessment. It must also be noted that if the excise returns require information in a particular form and once it has been provided as required, the assessee has no further responsibility - Indisputably, the entire period of demand in this case is beyond the normal period of limitation and hence the demand is time barred. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Whether the goods cleared under Notification No. 12/2012-CE should be considered as exempted goods.
2. Whether the appellant can retrospectively reassess the duty and forego the exemption.
3. Whether the invocation of the extended period of limitation is sustainable.
4. Whether the imposition of penalty under section 11AC is justified.

Summary:

1. Exempted Goods:
The appellant argued that goods cleared under Notification No. 12/2012-CE should not be considered as exempted goods because the duty on RSP basis was already discharged by its supplier. The Revenue contended that the goods are exempted under the notification and should be treated as such while calculating the CENVAT credit to be reversed u/s 6(3A) of CCR. The Tribunal accepted the Revenue's submission, stating, "Goods cannot be both dutiable and exempted at the same time depending on the convenience of the assessee."

2. Retrospective Reassessment:
The appellant proposed to retrospectively reassess the duty and forego the exemption to avoid the reversal of CENVAT credit. The Tribunal rejected this argument, emphasizing that "all assessments, including self-assessment, can be assailed before the Commissioner (Appeals)" and there is no provision for retrospective revision of self-assessment.

3. Extended Period of Limitation:
The appellant contested the invocation of the extended period of limitation, arguing that all facts were disclosed in the ER-1 returns. The Tribunal noted that the extended period can only be invoked if there is "fraud, collusion, willful mis-statement, suppression of facts, or violation of act or rules with intent to evade the payment of duty." The Tribunal found no evidence of these elements and stated, "the responsibility for detecting non-payment rests on the assessing officer," thereby ruling that the demand is time-barred.

4. Imposition of Penalty:
The Tribunal set aside the penalty imposed u/s 11AC, noting that the extended period of limitation was not justified. Consequently, the imposition of penalties was also set aside.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant, concluding that the demand is time-barred and the penalties are unjustified.

[Order pronounced on 12.04.2024]