2017 (4) TMI 92 - AT - Central Excise

Demand of reversal of cenvat credit in cash - Revenue s case is that pig iron moulds were cleared by the assessee by utilising the Cenvat credit, is not permissible - Held that - Rule 3(5A) does not say that amount equal to the duty is payable in cash. Therefore, payment made through Cenvat credit is also admissible - there is no wilful suppression of the facts by the assessee and vital element of intention to evade duty has been missing in these proceedings - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against dropping of duty demand by Commissioner (Appeals) on the grounds of utilizing Cenvat credit for payment of duty.
- Cross-objections filed by the respondent against Commissioner (Appeals) order based on time limitation.
- Department's contention that duty should have been paid in cash, not through Cenvat credit.
- Allegation of intentional evasion of duty by the respondent by using Cenvat credit for payment.

Analysis:
1. The appeal was filed by the Revenue against the dropping of duty demand by the Commissioner (Appeals) concerning the clearance of pig iron moulds by the assessee using Cenvat credit for duty payment. The department argued that duty should have been paid in cash, not through Cenvat credit. However, the Tribunal noted that Rule 3(5A) of the Cenvat Credit Rules did not specify that duty must be paid in cash, making payment through Cenvat credit admissible.

2. The respondent, represented by an advocate, filed cross-objections against the Commissioner (Appeals) order, claiming that the demand was dropped based only on time limitation. The Tribunal considered these cross-objections for decision along with the appeal.

3. The Revenue alleged that the respondent intentionally evaded duty by using Cenvat credit for payment instead of cash. However, the Commissioner (Appeals) found no wilful suppression of facts by the assessee and no intention to evade duty. The Commissioner's order highlighted that there was no intentional evasion of duty, as evidenced by the payment details provided by the appellant in their ER-1s.

4. The Commissioner (Appeals) emphasized that the extended period for recovery of Cenvat Credit under Section 11A(1) of the Act, read with Rule 14 of CCR, 2004, was not applicable due to the absence of wilful suppression of facts or intent to evade duty. Consequently, the appeal was rejected, and the cross-objections were disposed of accordingly.

This judgment clarifies the admissibility of payment through Cenvat credit, the importance of intention to evade duty in such cases, and the criteria for invoking the extended period for recovery of duty.