2010 (5) TMI 246 - HC - Central Excise

Demand- The case of appellant - revenue is that respondent assessee, namely the limited company who is manufacturing Polyester Films, has wrongly availed of cenvat credit by making payment of countervailing duty by debiting DEPB passbook instead of making payment in cash for the period April, 2003 to April, 2005. Tribunal holding that issue not settled during relevant period and larger period. Tribunal order holding that issue not settled during relevant period and larger period not invocable. Claim of assessee based on notification and assessee entitled to hold bonafide belief as to admissibility of notification. Held that- impugned order of Tribunal is sustainable.

Summary

Issues:
1. Whether the Tribunal erred in holding no malafide intention by the assessee in availing inadmissible credit?
2. Whether the Tribunal erred in setting aside the order of the adjudicating authority on limitation regarding customs duty exemption and Cenvat Credit?

Analysis:

Issue 1:
The appellant, a limited company manufacturing Polyester Films, was accused of wrongly availing Cenvat credit by debiting DEPB passbook instead of cash payment from April 2003 to April 2005. The revenue claimed Rs.62,71,210/- as wrongly availed credit, imposing penalties and interest. The revenue argued that the company's actions were intentional to evade duty, citing suppression of facts and the need for investigation to uncover the wrongful credit availment. The Tribunal found no malafide intention by the assessee, considering differing views on credit availability during the relevant period. The appellant contended that the assessee should have voluntarily surrendered the credit after a Tribunal decision, emphasizing the suppression of facts by the assessee. However, the Tribunal concluded that there was no legal infirmity in its decision, leading to the dismissal of both appeals.

Issue 2:
The Tribunal referred to the larger bench decision in the case of Essar Steel Limited, which concluded against the assessee on merits. However, the Tribunal also cited another decision involving legal debate during the relevant period, stating that the larger period could not be invoked due to the differing views on the issue. The Tribunal emphasized the need to examine whether there was actual suppression of facts, which depended on the specific circumstances of each case. The assessee's claim was based on a Customs Notification, and before the Tribunal's decision in the Essar Steel case, there was a favorable order for the assessee in a previous case. Considering these factors, the Tribunal found no legal infirmity in its decision and dismissed both appeals due to the absence of substantial questions of law.

This detailed analysis of the judgment provides insights into the legal reasoning and findings of the Gujarat High Court regarding the issues raised in the appeals.