2012 (4) TMI 135 - AT - Central Excise

Extended Period of Limitation demand, penalty and interest imposed on ground of alleged wrong availment of Cenvat Credit on inputs imported under DEPB scheme and wrong availment of Cenvat Credit on Capital Goods on which depreciation was claimed u/s 32 of the Income Tax Act - F.Y. 2003-04 SCN issued on 25.11.2005 Held that - Relevant show-cause notices were issued far beyond the normal period of limitation prescribed u/s 11A(i) of the Central Excise Act, without invoking the extended period of limitation. For invoking the extended period of limitation prescribed under the proviso to Section 11A(1), the department has to allege and establish fraud, collusion, willful suppression or misstatement of facts or contravention of any provision of law with intent to evade payment of duty, against the defaulter. This did not happen in the present case. Therefore the entire demand has to be held to be time-barred Decided in favor of assessee.

Summary

Issues:
1. Recovery of CENVAT credits irregularly taken by the respondent.
2. Levy of interest and imposition of penalties.
3. Invocation of extended period of limitation under Section 11A of the Central Excise Act.

Analysis:
1. The appeals filed by the department contested two orders of the Commissioner (Appeals) regarding the irregular availing of CENVAT credits by the respondent. The respondent had initially taken CENVAT credit on certain inputs and capital goods, which later raised audit objections. The department issued a show-cause notice in 2005 demanding recovery of the irregularly taken credits along with interest and penalties. The Assistant Commissioner's order vacating the protest was challenged by the respondent, leading to appeals before the Commissioner (Appeals).

2. The Assistant Commissioner's order was overturned by the Commissioner (Appeals), granting relief to the respondent. The department then appealed against these decisions, citing the recovery of CENVAT credits, interest, and penalties. However, the appellate tribunal found no merit in the department's appeals. The show-cause notices were issued beyond the normal limitation period without invoking the extended period. The recovery proposal was made under Section 11A of the Central Excise Act, which required strict adherence to the procedural requirements, including invoking the extended period based on specific grounds like fraud or suppression, which was not done in this case.

3. The tribunal highlighted that the department failed to establish fraud, collusion, or willful suppression to justify invoking the extended period of limitation. As per the precedent set by the Hon'ble Supreme Court in Kaur & Singh vs. CCE, New Delhi, the demand for recovery must adhere to the statutory provisions. Since the proviso to Section 11A(1) was not invoked, the demand was deemed time-barred. Consequently, both appeals by the department were dismissed, upholding the lower appellate authority's decision in favor of the respondent.