2014 (4) TMI 182 - AT - Central Excise

Waiver of pre-deposit of duty - quantum of credit availed by the appellant in terms of the formula mentioned in Rule 3(7) (a) - Held that - it is thus clear that the noticee has taken wrong cenvat credit in contravention of Cenvat Credit Rules, 2004. The noticee s contention that they have declared the fact of taking of credit in the ER- returns and therefore, extended period is not invokable is not sustainable due to the fact that in the ER-I returns only consolidated figures of total credit taken on inputs is shown in the ER- 1 returns, invoice wise credit figures are not shown. This fact of wrong credit could only be detected by audit on scrutiny of input invoices with cenvat credit account. Hon ble Supreme Court in the case of C.C.E. vs. Mehta & Compan 2011 (264) ELT 481 has held that for the purpose of computation of relevant date for invoking extended period cause of action is date of knowledge. Accordingly, Hon ble Apex Court has held that limitation of five year is to be computed from the date of knowledge to the department. However, in this case the assessee had never informed the department & even their invoice were camouflaged. The invoices did not contain the details of credit available to the Noticee. The said invoice only indicate the total amount of duty paid on DTA clearances - there is no column in the ER - 1 return requiring the assessee to show all the above detail. In the absence of requisition of law to disclose the above particulars non-disclosure would not reflect upon the mala fide of the appellant - Conditional stay granted.

Summary

Issues:
1. Dispute regarding availing cenvat credit from 100% EOU.
2. Contention over the inclusion of education cess and higher education cess in countervailing CVD.
3. Challenge of duty demand on the basis of limitation period.

Issue 1: Dispute regarding availing cenvat credit from 100% EOU
The appellant availed cenvat credit of duty paid on raw materials procured from 100% EOU, but a dispute arose regarding the quantum of credit availed. The Revenue contended that education cess and higher education cess should not be considered for calculating cenvat credit as they were not paid by the 100% EOU. The proceedings were initiated against the appellant, resulting in a duty demand and penalty imposition.

Issue 2: Contention over the inclusion of education cess and higher education cess in countervailing CVD
The Tribunal did not agree with the appellant's argument that education cess and higher education cess should be part of countervailing CVD. Citing previous decisions, it was held that these cesses do not form part of excise duty. The appellant's challenge on this ground was not upheld.

Issue 3: Challenge of duty demand on the basis of limitation period
The appellant challenged the duty demand on the grounds of limitation, arguing that there was no suppression or mala fide intent on their part as they regularly filed returns showing the credit availed. However, the Commissioner noted that although the credit was reflected in the returns, the method of calculation was not disclosed, making it difficult for the Revenue to detect the excess credit availed. The Tribunal found that the demand was barred by limitation and directed the appellant to deposit a specified amount within a set timeframe, with the pre-deposit of the remaining amount of duty and penalty waived and recovery stayed pending compliance.

This judgment addresses the issues of cenvat credit availed from 100% EOU, the inclusion of education cess and higher education cess in countervailing CVD, and the challenge of duty demand based on the limitation period. The Tribunal ruled against the appellant on the inclusion of cesses in CVD, upheld the duty demand challenge based on limitation, and directed a specific deposit amount within a set timeframe.