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2016 (1) TMI 520 - AT - Central ExciseCenvat Credit - Extended period of limitation - Bonafide belief - Credit on TMT bars, MS Flats, MS Angles, MS channel, MS beam, sheets, MS. Round, MS Steel, MS Pipes, etc., during the period from July, 2007 to June, 2009 - manufacture of Cement and Cement Clinker liable to Central Excise Duty - Held that - We tend to agree the appellants plea that they have entertained a bonafide belief regarding the eligibility of MS Angles, etc for CENVAT Credit during the impugned period. This is supported by the adjudicating authorities finding in one of the appellants other unit in Andhra Pradesh. The credit on similar iron and steel items were allowed by the department in that unit. We were informed that no appeal has been filed against the said order. There is no ground for invoking extended period for demand in the present case and as such the demand is barred by limitation. The impugned order is set aside on the issue of time bar and the appeal is allowed on this ground. - Decided in favor of assessee.
Issues Involved:
1. Eligibility for CENVAT Credit on iron and steel items. 2. Invocation of extended period for demand. 3. Alleged suppression of facts by the appellant. 4. Interpretation of legal principles regarding CENVAT Credit. Detailed Analysis: 1. Eligibility for CENVAT Credit on iron and steel items: The appellants were engaged in manufacturing cement and cement clinker and availed CENVAT Credit on various iron and steel items used for fabricating machinery within their factory. The Revenue disputed the eligibility of such credits for items like TMT bars, MS Flats, MS Angles, MS Channel, MS Beam, etc., used from July 2007 to June 2009. The Tribunal noted that the eligibility of CENVAT Credit on these items had been subject to varying interpretations and decisions at different judicial levels. The Larger Bench decision in Vandana Global Limited concluded that items used for supporting structures cannot be treated as inputs for capital goods if they become permanently embedded to the earth. However, prior to this decision, the interpretation was largely in favor of the assesses. 2. Invocation of extended period for demand: The Revenue issued a show cause notice on 27/7/2012, well beyond the normal period, to disallow and recover CENVAT Credit of Rs. 1,40,29,695/-. The original authority justified the extended period based on the appellant's alleged non-disclosure of manufacturing capital goods using steel items in their ER1-Returns. The Tribunal found that the scrutiny of ER1-Returns, which started the proceedings, was delayed by more than two years, and the demand for the extended period was not legally sustainable. The Tribunal emphasized that the appellants had been regularly filing ER1-Returns and subjected to periodic audits, negating the claim of suppression. 3. Alleged suppression of facts by the appellant: The original authority claimed that the appellants did not declare the manufacture of capital goods using steel items in their ER1-Returns and failed to produce quantity-wise details certified by a Chartered Engineer. The Tribunal found these claims contradictory and unsupported by substantial evidence. It held that mere non-declaration is insufficient to invoke the extended period unless there is a deliberate act to evade duty. The Tribunal agreed with the appellant's plea of a bona fide belief regarding the eligibility of CENVAT Credit, supported by a similar case in their Andhra Pradesh unit where credit was allowed without further appeal by the Revenue. 4. Interpretation of legal principles regarding CENVAT Credit: The Tribunal noted that the eligibility of CENVAT Credit on iron and steel items was a matter of legal interpretation, with divergent views before the Larger Bench decision in Vandana Global Limited. The Tribunal cited several judicial precedents, including Supreme Court rulings, which held that in cases of divergent legal interpretations, the extended period for demand could not be invoked. The Tribunal emphasized that the burden of proving malafide intent lies with the Revenue, which failed to provide credible evidence in this case. Conclusion: The Tribunal set aside the impugned order on the grounds of time bar, holding that the extended period for demand was not tenable. The appeal was allowed on this basis, with the Tribunal finding no substantial evidence of suppression or deliberate evasion by the appellants. The operative portion of the order was pronounced in the open court.
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