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2014 (12) TMI 118 - AT - Central ExciseCENVAT Credit - reversal of credit on obsolete inputs / WIP - suppression of fact - Invocation of extended period of limitation - effective date of introduction of Rule 3(5B) of the Cenvat Credit Rules by Notification NO. 26/2007-CE(NT) dated 11.5.2007 - Held that - Issue on merits is already settled in favour of the respondent as is evident from the judgment of the Hon ble Bombay High Court in the case of Hindalco Industries Ltd.(2011 (6) TMI 662 - BOMBAY HIGH COURT) as also by the Hon ble Gujarat High Court in the case of Ingersoll Rand (India) Ltd. (2013 (2) TMI 32 - GUJARAT HIGH COURT) wherein the Hon ble Courts have taken the view that the said provisions are applicable only from the date of introduction. The demand in this case is for the period prior to the date of introduction. I also find that the Revenue has not been able to elaborate what is the misrepresentation or misstatement done by the respondent. Similarly I do not find any suppression of fact with intention to evade duty in the whole case - Decided against Revenue.
Issues:
1. Invocation of extended period of limitation for demanding duty based on obsolete inputs. 2. Interpretation and applicability of Rule 3(5B) of the Cenvat Credit Rules. 3. Allegations of misrepresentation and intention to evade duty. 4. Consideration of limitation period and suppression of facts. Issue 1: Invocation of extended period of limitation The respondent, engaged in manufacturing auto-ancillary parts, had certain obsolete inputs and WIP in their trial balance sheet for 2003-04. The Revenue demanded duty of &8377; 19,94,322 invoking the extended period of limitation. The Commissioner (Appeals) set aside the demand order citing limitation of time. The Revenue contended that the extended period was justifiable due to misrepresentation by the respondent regarding the whereabouts of the inputs. The respondent argued that the reduction in value was for accounting purposes, not for evasion. The Tribunal noted that there was no suppression of facts or misstatement by the respondent, and the demand was based on figures in public financial records. The appeal was dismissed as the demands were found to be time-barred. Issue 2: Interpretation of Rule 3(5B) of the Cenvat Credit Rules The main grounds of appeal by the Revenue included the application of Rule 3(5B) introduced in 2007, requiring payment equivalent to the cenvat credit taken on written-off inputs. The Revenue argued that the Commissioner (Appeals) erred in not invoking the extended period, alleging misrepresentation by the respondent. The respondent contended that the rule applied only to fully written-off goods post-2011 amendment. The Tribunal referenced case laws supporting the respondent's stance and highlighted that the rule was not applicable to partially written-off goods before 2007. The Tribunal found the rule inapplicable to the respondent's case and dismissed the Revenue's appeal. Issue 3: Allegations of misrepresentation and intention to evade duty The Revenue alleged that the respondent failed to reverse cenvat credit on written-off inputs and intentionally withheld information to evade duty, justifying the invocation of the extended period. The respondent argued that the reduction in value was in compliance with accounting practices and not an attempt to evade duty. The Tribunal found no evidence of misrepresentation or suppression of facts by the respondent, dismissing the Revenue's claims of intentional evasion. Issue 4: Consideration of limitation period and suppression of facts The Commissioner (Appeals) noted that the demands were time-barred as there was no misstatement or suppression of facts by the respondent. The Tribunal concurred, citing precedents where similar provisions were applicable only from the date of introduction. The Tribunal found no grounds for invoking the extended period, as the demands were based on publicly available financial records and not due to intentional evasion. The appeal of the Revenue was dismissed based on the lack of misrepresentation or suppression of facts. This detailed analysis of the judgment highlights the key issues surrounding the invocation of the extended period of limitation, interpretation of Cenvat Credit Rules, allegations of misrepresentation, and considerations of limitation period and suppression of facts.
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