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2024 (12) TMI 525 - AT - Central ExciseInvocation of extended period of limitation - suppression of facts - failure to obtain Central Excise registration by not observing the other statutory formalities required under Central Excise Law - CENVAT Credit demand - levy of penalty - Personal penalty imposed upon the partner. Invocation of extended period of limitation - suppression of facts - failure to obtain Central Excise registration by not observing the other statutory formalities required under Central Excise Law - HELD THAT - In this matter the show cause notice is dated 06.01.2016 and demand of duty pertains to the period December 2010 to June 2015. The extended period has been invoked on the ground that the Appellants had suppressed the material facts from the knowledge of the Department by not obtaining Central Excise registration and by not observing the other statutory formalities required under Central Excise Law. Thus, it appears that Appellant has deliberately and consciously suppressed material fact as to manufacture and clearances of excisable goods, contravened the provisions of Central Excise Act, 1944 and Rules, all with intent to evade payment of Central Excise Duty. However, the facts on record do not support the case of the Department for suppression. It is found that based on books of account and records maintained by Appellants, Revenue has raised impugned demand of duty on goods manufactured and cleared. It is not disputed by the department on clearances of goods appellant also issued invoices showing appropriate VAT payment. This is not the case of the department is that appellant have not issued invoices during the disputed period. Appellants are also registered under the provisions of The Gujarat Value Added Tax Act, 2003, (VAT Act) and are assessee under the Income Tax Act, 1961 - It is not the case of the Revenue that appellants have indulged into clandestine manufacture and clearances of goods. When manufacture and clearances of goods and all other business transactions are duly recorded in the books of account and when books of account and other records are maintained by appellants, it cannot be alleged that non-payment of the duty is on account of deliberate and conscious suppression of material facts as to manufacture and clearance of excisable goods with intent to evade payment of excise duty as contemplated u/s. 11A(4) of the Act and larger period could not be invoked in such case. It is now well-settled that for invoking the proviso to Section 11A(4), there must be suppression of facts, fraud, mis-statement, etc., with an intention to evade payment of duty, the same are absent in this matter. It is found that the appellant admittedly paid the Sales Tax/VAT on the entire transaction and also issued invoice/bills to customer for the clearance of the goods. The said invoices also account for in their books of account and department during the investigation also admitted the said facts. Therefore, the entire activity of appellant is very much on record - thus, no suppression or mis-declaration can be attributed to the appellant for invoking extended period of demand. Accordingly, the demand for longer period is not sustainable. CENVAT Credit demand - HELD THAT - Cenvat credit was availed in the month of September, 2015 and the same was also reversed in the month of September 2015 by the appellant as evident from the ER-1 return for the month of September, 2015. Appellant had taken the credit, they never utilized it and when the irregularity was pointed out the credit was reversed without demur. In these circumstances, it is found that neither cenvat demand nor interest demand is sustainable and this issue is squarely covered by the judgment of this Bench in the case of PAGE APPARELS PVT. LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE 2006 (9) TMI 65 - CESTAT, BANGALORE wherein it was held that the interest would not be payable when there is no utilization of Modvat credit. Further, the Hon ble Supreme Court in the case of COMMR. OF C. EX. CUS. (APPEALS), AHMEDABAD VERSUS NARAYAN POLYPLAST 2004 (11) TMI 112 - SUPREME COURT held that once the credit was reversed, it amounted to not taking the credit at all. Levy of penalty - HELD THAT - As the appellant had no intention to evade duty, the appellant is also not liable for penalty. Accordingly, the entire penalty involved in the present case is set aside. Personal penalty imposed upon the partner - HELD THAT - It is found that since there is no malafide in nonpayment of duty by the appellant s partnership firm as discussed, question of personal penalty upon the partner under Rule 26 does not arise. Moreover, it is settled in this jurisdictional High Court of Gujarat judgments in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS JAI PRAKASH MOTWANI 2009 (1) TMI 501 - GUJARAT HIGH COURT that in a case against partnership firm separate personal penalty on it s partner is not justified and hence not sustainable. Appeal disposed off.
Issues Involved:
1. Non-payment of Central Excise Duty and invocation of extended period due to alleged suppression of facts. 2. Imposition of penalty under Section 11AC of the Central Excise Act and Rule 26 of the Central Excise Rules, 2002. 3. Demand and reversal of Cenvat Credit. Detailed Analysis: 1. Non-payment of Central Excise Duty and Invocation of Extended Period: The core issue was whether the appellant deliberately suppressed material facts to evade Central Excise Duty, justifying the invocation of the extended period under Section 11A(4) of the Central Excise Act. The appellant argued that they acted on the advice of their Chartered Accountant, who misinformed them that excise registration and duty payment were unnecessary. The appellant contended that there was no malafide intention, as they would have recovered the duty from customers if advised correctly. They also argued that all transactions were recorded in their books, audited under the IT Act, and disclosed in VAT returns, negating any intent to suppress facts. The tribunal found substantial force in these arguments, noting that the department failed to provide evidence of deliberate suppression. It was observed that the appellant's records, including VAT and income tax returns, were accessible to the authorities, and the department had ample opportunity to detect any discrepancies during the normal period. Thus, the tribunal concluded that the extended period could not be invoked, as there was no positive act of suppression with intent to evade duty. 2. Imposition of Penalty: The appellant challenged the imposition of penalties under Section 11AC and Rule 26, arguing that penalties require a positive act indicating an intention to evade duty, which was absent in this case. The tribunal agreed, noting that the appellant's actions were not driven by malafide intent but rather by incorrect advice from their Chartered Accountant. The tribunal emphasized that mere non-payment of duty, without evidence of collusion, fraud, or willful misstatement, does not justify penalties. Citing relevant case law, the tribunal set aside the penalties, reiterating that the burden of proving intent to evade duty lies with the department, which it failed to discharge. 3. Demand and Reversal of Cenvat Credit: Regarding the Cenvat Credit demand, the appellant had reversed the credit before the issuance of the show cause notice, and there was no utilization of the credit. The tribunal found that since the credit was reversed promptly, neither the demand for the credit nor the interest was sustainable. The tribunal referenced previous judgments, including those from the Supreme Court, which held that reversal of credit equates to not having taken it at all, thereby negating the need for interest or penalty. Consequently, the tribunal set aside the Cenvat Credit demand and related penalties. Conclusion: The tribunal upheld the central excise duty demand for the normal period, along with interest, but set aside the demand for the extended period, the Cenvat Credit demand, and all penalties. The tribunal's decision was based on the absence of evidence for deliberate suppression and intent to evade duty, as well as the prompt reversal of Cenvat Credit by the appellant. The appeals were allowed with consequential relief, modifying the impugned order accordingly.
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