2017 (7) TMI 709 - AT - Central Excise

Time limitation - CENVAT credit - denial of the proportionate Cenvat credit availed in respect of Furnace Oil used for generation of electricity, a part of which was transmitted to Tamil Nadu Electricity Board (TNEB) - whether notice issued in 2005 covering the period from April, 2000 to June, 2001 is barred by limitation or not? - Held that - The criteria for invocation of the longer period of limitation is suppression, misstatement etc., with an intent to evade payment of duty - no malafide intention can be attributed to the assessee, so as to invoke the longer period of limitation. Accordingly, the demand is barred by limitation and the denial of credit in respect of Furnace Oil along with setting aside of interest and penalty set aside. Penalty - Damaged inputs - Waste and Scrap and Jumbo Baggase - demand - Held that - as the entire credit was availed by reflecting the same in statutory records in terms of the Central Excise provisions. As such, it stands contended that there was no suppression with any malafide on their part so as to invite any penal action. Appeal allowed - decided in favor of appellant.

Issues involved:
1. Denial of proportionate Cenvat credit for Furnace Oil used for electricity generation transmitted to Tamil Nadu Electricity Board (TNEB).
2. Non-reversal of Cenvat credit for waste, scrap of iron, jumbo bags, and wrong utilization of credit for damaged inputs.
3. Imposition of penalties by Commissioner (Appeals) and subsequent appeals by the appellant and Revenue before the Tribunal.
4. Interpretation of law regarding Cenvat credit rules and conflicting decisions by different benches.
5. Barred by limitation: Notice issued in 2005 covering the period from April 2000 to June 2001.
6. Confirmation of demand for waste, scrap, jumbo bags, and damaged inputs.
7. Imposition of penalties in the absence of malafide intent.

Detailed Analysis:
1. The main issue revolved around the denial of Cenvat credit for Furnace Oil used in electricity generation and transmitted to TNEB. The Tribunal upheld the denial based on a Supreme Court decision reversing earlier favorable decisions. However, the appellant argued against the limitation period for issuing the notice, citing confusion in the field during the relevant period and the absence of malafide intent. The Tribunal found in favor of the appellant, setting aside the denial of credit, interest, and penalty.

2. The demands for waste, scrap, jumbo bags, and damaged inputs were partially confirmed, with the appellant accepting liability to repay. However, penalties were set aside due to the absence of malafide intent on the part of the appellant in availing the credits and reflecting them in statutory records as per Central Excise provisions.

3. The Commissioner (Appeals) imposed penalties in two separate orders, leading to appeals by the appellant. The Tribunal deemed the second penalty imposition as unnecessary since the first penalty had already been set aside. Consequently, both penalties were set aside in the interest of justice.

4. The judgment highlighted the importance of considering the intent behind actions when imposing penalties, especially in cases where conflicting legal interpretations exist. The Tribunal emphasized the need to differentiate between genuine mistakes and deliberate attempts to evade duties, especially in complex legal scenarios.

5. Overall, the judgment underscored the significance of fair treatment and consideration of circumstances when dealing with tax disputes, emphasizing the need for clarity in legal provisions to avoid confusion and conflicting interpretations that could lead to unintended consequences for taxpayers.

← Previous Next →