2009 (7) TMI 934 - AT - Central Excise

Summary

Issues:
1. Whether the applicant is eligible for Cenvat credit by debiting DEPB scrips as duty paid.
2. Whether the demand raised by the customs authorities is time-barred.

Analysis:
1. The applicant purchased DEPB scrips and used them to avail exemption from payment of CVD, debiting the scrips as duty paid and taking credit of CVD. However, a show cause notice was issued challenging this practice. The applicant argued that they believed in good faith that using DEPB credit for CVD payment was permissible, citing Tribunal decisions from 2002 and 2003. The Commissioner (Appeals) upheld the demand, but the Tribunal noted that the applicant's action was bona fide. Despite the unfavorable decision on merits, considering the prevailing Tribunal decisions at the time and the time lapse between the audit in 2003 and the show cause notice in 2007, the Tribunal found the demand potentially time-barred. Consequently, the Tribunal waived the pre-deposit of dues and stayed the recovery pending appeal.

2. The Tribunal acknowledged that the applicant's Cenvat credit claim was ultimately unsuccessful on merits. However, the Tribunal found that the demand raised in 2007 may be time-barred due to the audit conducted in 2003 and the delay in issuing the show cause notice. The Tribunal considered the timing of events and the prevailing legal interpretations during the relevant period. Despite the unfavorable decision on the substantive issue, the Tribunal granted relief to the applicant based on the potential time bar, allowing a waiver of the dues and staying the recovery pending the appeal's disposal.