2009 (7) TMI 1069 - AT - Central Excise

Summary

Issues:
1. Time limitation for demand under small scale exemption notification.
2. Validity of demand for reversal of Cenvat credit.
3. Suppression or misstatement leading to duty evasion.

Issue 1: Time limitation for demand under small scale exemption notification

The judgment delves into the issue of the time limitation for raising a demand under a small scale exemption notification. The appellant had opted for the small scale exemption notification No. 8/2003-C.E., dated 1-4-2003. The department issued a show cause notice on 19-6-07, proposing confirmation of the credit amount and imposition of penalty, which was beyond the normal limitation period of one year. The tribunal observed that the objection was raised by the department after scrutinizing the records maintained by the appellant, even though the returns indicating credit availment were duly filed with the department. The jurisdictional superintendent had also objected to the credit availment in prior communications. The tribunal concluded that since the department was aware of the facts and the credit was availed under intimation to the Revenue, there was no suppression or misstatement by the appellant to evade duty payment. Consequently, the demand was set aside on the grounds of time limitation, and the appeal was allowed with consequential relief to the appellant.

Issue 2: Validity of demand for reversal of Cenvat credit

The judgment addresses the validity of the demand for the reversal of Cenvat credit. The appellant had Modvat credit lying in their credit account, which was carried forward under due intimation to the department. The department subsequently issued a letter asking the appellant to reverse the credit. However, the appellant contested that the credit availment was not against the provisions of the notification. Despite the objections raised by the superintendent and the subsequent show cause notice leading to an order upheld by the Commissioner (Appeals), the tribunal found that the entire facts were known to the department, and the credit was availed with intimation to the Revenue. As there was no intent to evade duty payment, the tribunal set aside the demand, allowing the appeal in favor of the appellant.

Issue 3: Suppression or misstatement leading to duty evasion

The judgment analyzes whether there was any suppression or misstatement with intent to evade payment of duty by the appellant. It was established that the department was aware of the facts regarding the credit availment, as evidenced by prior objections raised by the jurisdictional superintendent and the appellant's intimation to the Revenue. Given that there was no deliberate attempt to conceal information or evade duty payment, the tribunal concluded that no suppression or misstatement could be attributed to the appellant. Consequently, the demand was set aside based on the lack of evidence of intent to evade duty payment, and the appeal was allowed with consequential relief granted to the appellant.

This comprehensive analysis of the judgment highlights the key legal issues addressed and the tribunal's findings and conclusions regarding the time limitation for demand under the small scale exemption notification, the validity of the demand for reversal of Cenvat credit, and the absence of suppression or misstatement leading to duty evasion.