2012 (8) TMI 689 - HC - Central Excise

Cenvat credit - Whether there could be any intention to evade payment of duty on the part of the applicants when the applicants always had the credit balance in their RG 23A Part II Register even after discharging duty liability and at no point of time they paid duty from their PLA Held that - At the time of the search, private records were found. The assessee is not able to make out a case that the private records, which were found from the business premises - on physical verification of the inputs, such inputs were not found there - assessee is not able to dispute this finding recorded by the Tribunal in this regard - assessee is not entitled for any benefit of the credit balance available in RG 23A Part II Register inasmuch as in the present case, on the basis of the seized private records, the suppression of production was detected - in favour of the revenue.

Summary

Issues:
1. Whether there was an intention to evade payment of duty by the applicants.
2. Whether the extended period of limitation under proviso to Section 11A(1) of the Act could be invoked.

Detailed Analysis:
1. The case involved M/s. Super Polyplast (Pvt.) Limited, engaged in manufacturing rigid PVC pipes, where Central Excise Officers found excess quantities of finished goods and raw materials during a search. The officers alleged clandestine removal of PVC pipes, suppression of production, and inadmissible modvat credit. A show cause notice was issued for duty evasion, leading to a demand confirmation of Rs. 55,45,108 and penalties imposed. The Tribunal partially allowed the appeal, reducing the demand to Rs. 24,49,083, disallowing modvat credit, and reducing penalties. The High Court analyzed the discrepancies and upheld the demand based on private records for the period 10th March 1995 to 31st December 1995, except August 1995, and set aside the demand for the prior period due to lack of evidence beyond presumption.

2. The Tribunal's decision on the limitation issue was crucial. The proviso to Section 11A(1) allows invoking extended limitation for duty evasion due to fraud, misstatement, or suppression of facts. The Tribunal upheld the demand for the period 10th March 1995 to 31st December 1995, citing private records as evidence of suppression. The High Court concurred, noting the clear suppression of production based on private records, justifying the invocation of the proviso. The Court emphasized that the credit balance in RG 23A Part II Register did not negate the suppression of production and duty evasion discovered through private records. Consequently, the Court affirmed the Tribunal's decision, answering both issues against the assessee and in favor of the revenue.

In conclusion, the High Court upheld the demand for duty evasion based on private records, invoked the proviso to Section 11A(1) due to suppression of facts, and denied the benefit of credit balance in RG 23A Part II Register. The judgment highlighted the importance of evidence in determining duty liability and affirmed the Tribunal's decision on both issues, ultimately ruling in favor of the revenue.