2014 (5) TMI 530 - HC - Central Excise

CENVAT Credit - Whether on the facts and in the circumstance of the case the CESTAT, New Delhi was justified in law in holding that the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 readwith Rule 15(2) of the Cenvat Credit Rules, 2004 in the present case is not invokable as there was no intention of the assessee to evade payment of duty - Held that - when the assessee cleared inputs on which cenvat credit had been availed of, it was required to reverse the credit equal to the duty of excise on the assessable value as determined by the original manufacturer at the time of removal of the goods, namely the credit originally taken and not the duty on transaction value at the time of sale of inputs. Hence, the credit of ₹ 22.20 lacs was found to be correct - Tribunal has also as a matter of fact found that when the audit team of the department visited the establishment, all the information had been duly made available by the assessee and hence, there was no intent to evade duty. Both on law and on facts, the view of the Tribunal is sustainable - Decided against Revenue.

Summary

Issues:
1. Interpretation of the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944.
2. Reversal of cenvat credit on inputs not used in the manufacture of final products.
3. Application of the extended period of limitation in the case.
4. Intent to evade payment of duty by the assessee.

Analysis:
1. The main issue in this case revolves around the interpretation of the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944. The Tribunal held that the extended period of limitation should not be invoked due to conflicting judgments of the Tribunal until the issue was settled by a larger Bench decision. The Tribunal's decision was supported by a Supreme Court ruling in Continental Foundation Joint Venture vs. CCE, Chandigarh -I, emphasizing the lack of intent to evade duty by the assessee and the availability of information during the audit team's visit.

2. Another crucial aspect of the case was the reversal of cenvat credit on inputs that were not utilized in the manufacture of final products. The Tribunal referred to the Eicher Tractors vs. CCE, Jaipur decision, stating that the assessee was required to reverse the credit equal to the duty of excise on the assessable value as determined by the original manufacturer at the time of goods removal. In this case, the credit of Rs.22.20 lacs was found to be correct, aligning with the Tribunal's decision.

3. The application of the extended period of limitation was a significant point of contention. The Tribunal's reasoning for not invoking the extended period of limitation was based on the unsettled issue until a larger Bench decision clarified the matter. The Tribunal's reliance on legal precedents and the factual finding that the assessee had cooperated during the audit further supported the decision to not apply the extended period of limitation.

4. Lastly, the issue of the assessee's intent to evade payment of duty was addressed. The Tribunal found that there was no intent to evade duty, emphasizing the availability of all information during the department's audit visit. This factual finding, coupled with the legal analysis supporting the Tribunal's decision, led to the dismissal of the appeal by the revenue, with no order as to costs.

In conclusion, the judgment delves into various legal intricacies surrounding the interpretation of the extended period of limitation, cenvat credit reversal, intent to evade duty, and the application of legal precedents to determine the outcome of the case. The detailed analysis provided a comprehensive understanding of the issues at hand and the rationale behind the Tribunal's decision, ultimately leading to the dismissal of the appeal.