2017 (9) TMI 1187 - HC - Central Excise

CENVAT credit - inputs - time limitation - Held that - the assessee had never raised the contention of unreasonable delay in raising the demand before the adjudicating authority or even before the first appellate authority in precise form. The statute does not envisage any period of limitation - What is reasonable period is always a question of fact to be gathered on the basis of relevant facts and circumstances brought on record. Even the assessee had not brought any relevant facts on record before the adjudicating and appellate authority. A mere contention before the Tribunal at the second appellate stage would not be permitted - appeal dismissed.

Summary

Issues:
1. Whether a recovery period of three years from the date of show cause notice is reasonable in all cases?
2. Whether the final order allowing recovery for three years is valid when no malafide intent is present?
3. Whether the order allowing recovery for three years should be set aside in the absence of statutory provision for such limitation?

Analysis:

Issue 1: The assessee appealed against the CESTAT judgment, challenging the recovery demand of ?3,07,040 for the period between 2002 and 2007, following the issuance of a show cause notice in 2007. The assessee contended that the duty reversal was unnecessary and objected to the notice's timing after four years. Despite opposition, the adjudicating authority, Commissioner, and Tribunal rejected these arguments, leading to the current appeal.

Issue 2: The counsel for the assessee argued on the aspect of limitation, citing the case of Pratibha Syntex Ltd. vs. Union of India, where it was held that a recovery period beyond three years would be unreasonable when no specific limitation period is prescribed. However, it was noted that the assessee did not raise the delay contention explicitly before the lower authorities. The absence of a statutory limitation period required a factual assessment of reasonableness based on relevant circumstances, which the assessee failed to provide. The Court emphasized that a mere assertion at the appellate stage without supporting facts is insufficient.

Issue 3: The Court observed that the assessee did not present relevant facts regarding the delay issue before the lower authorities. Referring to the Pratibha Syntex case, the Court reiterated that determining a reasonable recovery period depends on the case's specific facts. Since the assessee failed to provide such facts earlier, the Court declined to entertain the appeal. The dismissal of the appeal should not be construed as confirming the Tribunal's view on the three-year limitation period, emphasizing the need for a factual basis in such determinations.

In conclusion, the tax appeal was dismissed, highlighting the importance of presenting relevant facts and circumstances to support arguments regarding recovery periods in tax matters.