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2017 (6) TMI 263 - AT - Central ExciseCENVAT credit - the appellant had made provision for value of ₹ 46,35,057/- in respect of raw-materials in their financial records as on 31.03.2008 but failed to pay an amount equivalent to the cenvat credit taken in respect of the said inputs and therefore it appeared that they were liable for payment of an amount equivalent to the cenvat credit availed by them - Held that - under Rule 3 of Cenvat Credit Rules there was no recovery mechanism prior to 01.03.2013 and therefore demanding the cenvat credit is not sustainable in law - the entire demand is time-bar because the show-cause notice was issued on 01.01.2010 for the provision to write off which was created in the financial records of the appellant as on 31.03.2008 which is beyond the period of limitation of one year - appeal allowed - decided in favor of appellant.
Issues:
- Demand of cenvat credit availed on raw-materials/packing materials - Allegation of suppression of material fact - Time-barred demand due to limitation period - Recovery mechanism under Rule 3 of Cenvat Credit Rules Analysis: Demand of Cenvat Credit: The appellant, engaged in manufacturing excisable goods, faced a demand for cenvat duty of ?1,86,679 attributable to cenvat credit availed on raw-materials/packing materials written off from Books of Accounts as on 31.03.2008. The demand was accompanied by interest and a penalty under Rule 15(2) of the Cenvat Credit Rules 2004. The Commissioner (Appeals) rejected the appellant's appeal, leading to the present appeal before the Tribunal. Allegation of Suppression: The appellant argued that the impugned order was passed contrary to the law and binding judicial precedents, emphasizing that there was no recovery mechanism under Rule 3 of the Cenvat Credit Rules before 01.03.2013 to recover cenvat credit linked to written-off inputs. The appellant cited relevant legal decisions to support their position and contended that the quantification of the demand was based on assumptions, contrary to Rule 3(5B) of the Cenvat Credit Rules. They asserted that the demand, raised on the basis of information from the Trial Balance Sheet, did not involve any suppression of facts. Time-Barred Demand: The appellant further argued that the demand was time-barred as the show-cause notice was issued on 01.01.2010 for the provision made in the financial records as of 31.03.2008, exceeding the one-year limitation period. They maintained that the longer limitation period could not be invoked as there was no intent to evade payment, and the demand was based on information available during an audit. Recovery Mechanism under Rule 3: The Tribunal, after hearing both parties and examining the records, found that prior to 01.03.2013, there was no recovery mechanism under Rule 3 of the Cenvat Credit Rules. Citing legal precedents, the Tribunal held that demanding the cenvat credit in this case was not sustainable in law. Moreover, the Tribunal concluded that the demand was time-barred due to the issuance of the show-cause notice beyond the one-year limitation period. The Tribunal also noted that the allegation of suppression was not valid, given the introduction of the provision for reversal of credit in the Cenvat Credit Rules in 2007. Consequently, the Tribunal set aside the impugned order, allowing the appeal of the appellant on both merit and limitation grounds. This detailed analysis highlights the legal arguments, precedents, and findings related to the demand of cenvat credit, allegation of suppression, time-barred nature of the demand, and the absence of a recovery mechanism under Rule 3 of the Cenvat Credit Rules in the context of the appellate tribunal's judgment.
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