2024 (10) TMI 620 - AT - Central Excise

Denial of CENVAT Credit wrongly availed and utilized with interest and penalty - Extended period of limitation - HELD THAT - The impugned order appropriates an amount of Rs.3,58,58,266/- alongwith interest of Rs.48,132/- reversal/payment which was reported to the concerned Authorities vide letter dated 11.02.2011 and 29.03.2011. As these amounts have been paid and reported by the Appellant either on his own violation or on being pointed out by the Revenue Authorities, the short payment if any on this account should have been questioned and a show cause notice issued within one year from the date of receipt of these letters dated 11.02.2011 and 29.03.2011 as per the provisions of Section 11A(3). For such payment there cannot be any reason for invocation of extended period of limitation for making a demand by way of issuance of show cause notice under Section 11A (4) to the extent of these amounts paid. There are no merits in the impugned order invoking extended period of limitation. For remaining amounts, it is found that the whole issue is that credit has been taken against the bill of entries; however at the time of Audit/scrutiny, Appellant produced photocopies of the bill of entries as original was not traceable. Nothing is available on record to show that the original copy of the bill of entries was subsequently produced. Let it be as it is, this issue is no more res integra and following has been held by Delhi Bench in the case of CENTURY METAL RECYCLING PVT. LTD. VERSUS CGST, CCE, ALWAR 2018 (7) TMI 984 - CESTAT NEW DELHI where it was held that ' As long as the input is received in the factory of the production and used for the manufacture of excisable goods, there should not be any bar in taking Cenvat credit under Rule 9 thereof which is substantial benefit and not to be denied on account and procedural ground. In this case, Revenue has not brought before us there is any loss caused by the appellant to the Revenue but for the procedural aspect of taking credit at the strength of photo copy of bill of entry.' There are no merits either invocation of extended period of limitation for denial of the credit on this ground. Demand to this extent also needs to be set aside. The amount of Rs.3,58,58,266/- with interest of Rs.48,132/- had been deposited by the appellant and jurisdictional authorities informed in terms of Section 11A(2) much prior to the issuance of the show cause notice - for the remaining amount of Rs.5,47,862/- the irregularity being held as technical lapse, the same could not be covered by the words used in the sub-section 11A(4). Appeal allowed.

Summary

Issues:
1. Denial of CENVAT credit and imposition of demand, interest, and penalties against M/s Pepsico India Holdings (P) Ltd.
2. Irregular availing of CENVAT credit by the Appellant.
3. Show cause notice invoking extended period and imposition of penalties on the authorized signatory of the Appellant.

Analysis:
1. The judgment involves the denial of CENVAT credit amounting to Rs.3,64,06,128/- against M/s Pepsico India Holdings (P) Ltd., leading to the confirmation and determination of the demand under the Central Excise Act, 1944. The order also imposes interest and penalties on the company and its authorized signatory. The penalties are imposed under specific sections of the Central Excise Act, 1944 and the CENVAT Credit Rules, 2004.

2. The Appellant, engaged in the manufacture and clearance of excisable goods, was found to have irregularly availed CENVAT credit by incorrectly calculating the credit amount and using photocopies of documents instead of originals. The audit revealed discrepancies in availing credit against the excise duty paid on goods, leading to a show cause notice invoking the extended period for demand, interest recovery, and penalty imposition.

3. The judgment addresses the issue of invoking the extended period of limitation for demanding the irregularly availed CENVAT credit. It highlights the importance of compliance with procedural requirements and the burden of proof on the manufacturer regarding the admissibility of credit. The judgment cites precedents to support the argument that technical lapses should not warrant the invocation of the extended period of limitation for demand.

In conclusion, the judgment allows the appeals filed by the aggrieved Appellants, setting aside the demand for wrongly availed credit and the penalties imposed on the company and its authorized signatory. The decision emphasizes the importance of timely compliance and proper documentation in availing CENVAT credit to avoid penalties and demands.