2014 (4) TMI 648 - AT - Central Excise

Waiver of pre deposit - Denial of CENVAT Credit - Invocation of extended period of limitation - Held that - We really fail to understand the late issuance of the show cause notice, by invoking the extended period based upon the same set of investigation, when the first show cause notice itself was issued in December 2008. The period covered in the present appeal could have been covered in the earlier show cause notice inasmuch as that show cause notice was also issued after a period of two years from June 2006. As such we are of the view that the appellant had a good case on limitation. Apart from that we also note that the appellant had already deposited Rs. 2.5 lakhs approximately. By treating the same as sufficient for the purpose of Section 35F of the Act, we dispense with the balance amount of duty and entire amount of penalty and stay the recovery of penalties upon both the appellants during the pendency of the appeals - Stay granted.

Summary

Issues:

1. Dispensing with pre-deposit of duty and penalty based on denial of cenvat credit.
2. Objection to demand on limitation regarding the investigation period.
3. Late issuance of show cause notice and invoking extended period.
4. Appellant's case on limitation and deposited amount.
5. Stay on recovery of penalties during appeal pendency.

Analysis:

1. The judgment deals with the appellant's plea to waive the pre-deposit of duty and penalty amounting to Rs.12,23,356/-, which were confirmed due to the denial of cenvat credit for inputs (MS rounds) sourced from a manufacturer, M/s Haryana Steel & Alloys Limited. The investigation revealed that the manufacturer was not supplying the specific inputs to the appellant, leading to the denial of credit. The appellant contested the demand, highlighting that direct sales of MS rounds were not objected by the revenue, and objected to the procurement through dealers.

2. Regarding the objection on limitation, the investigations were conducted in September 2005, and a show cause notice was issued to the appellant in December 2008, covering the period from April 2005 to June 2006. The tribunal noted the delayed issuance of the show cause notice based on the same investigation, questioning the necessity of invoking the extended period when the earlier notice itself was issued after a significant delay.

3. The tribunal expressed confusion over the timing of the show cause notice, indicating that the period covered in the current appeal could have been addressed in the previous notice issued two years after June 2006. Consequently, the tribunal found merit in the appellant's argument on limitation. Additionally, considering the appellant had already deposited around Rs. 2.5 lakhs, deemed sufficient under Section 35F of the Act, the tribunal decided to dispense with the remaining duty amount and the entire penalty.

4. In light of the above findings, the tribunal granted a stay on the recovery of penalties for both appellants during the pendency of the appeals. The stay petitions were disposed of accordingly, providing relief to the appellants from further financial obligations until the resolution of the appeal process.