2017 (11) TMI 991 - AT - Central Excise

Extended period of limitation - it is the contention of the appellant that the entire facts were in the knowledge of the Department and the declarations made on the invoices clearly showed the number of packages being supplied by them free of cost, hence longer period of limitation was not justified - Held that - Admittedly, the letter stands received by the Revenue as also the fact that the invoices carried a declaration to the fact of free supply of goods does not stand doubted by the Revenue. In fact the said declaration available in the invoices stand accepted in the show cause notice itself. If that be so, there cannot be any mala-fide intention, mis-statement or suppression with intent to evade payment of duty on the part of the appellant. In the absence of the same, the longer period of limitation is not available to the Revenue - the demand having been raised behind the normal payment of limitation, is fully time barred. Penalty - CENVAT credit - inputs/raw materials, cleared the same to their sister unit without reversal of the credit - Held that - In view of the fact that the appellants have subsequently debited their Cenvat account in respect of inputs, which were cleared by to their sister unit, as also on account of the fact that the entire situation was Revenue neutral inasmuch as the credit debited by the appellant was available as credit to their sister unit, I find no justification for imposition of penalty upon them. Appeal allowed in part.

Summary

Issues:
1. Time bar for demand of duty on duty-free supplies made by the appellant.
2. Imposition of penalty for not reversing Cenvat Credit on cleared inputs.
3. Duty confirmation for short stock detected at the appellant's factory.
4. Denial of Cenvat Credit on the ground of vehicle incapability.
5. Imposition of penalty on the Director of the Company.

Analysis:
1. The main issue in this judgment revolves around the time bar for demanding duty on duty-free supplies made by the appellant. The appellant had informed the Revenue about supplying extra meters for warranty, seeking advice on the procedure's conformity with Central Excise Laws. Despite this, no response was received. The appellant contended that the Revenue was aware of the free supplies through declarations on invoices. The Tribunal held that since the Revenue had knowledge of the situation and the appellant's declarations, the longer period of limitation was not justified. As a result, the demand was considered time-barred and set aside.

2. Another issue addressed was the imposition of penalty on the appellant for not reversing Cenvat Credit on cleared inputs to their sister unit. The appellant acknowledged the oversight and rectified it by debiting the amount. The Tribunal found the situation to be revenue-neutral as the credit was still available to the sister unit. Consequently, the penalty was deemed unjustified and set aside.

3. The judgment also dealt with the duty confirmation for short stock detected at the appellant's factory. While the appellant did not contest the duty amount due to the low value, they challenged the imposition of penalty. The Tribunal upheld the duty demand based on stock shortages but set aside the penalty, stating that accepting duty liability did not imply involvement in clandestine activities.

4. The denial of Cenvat Credit amounting to &8377; 49,779 was another issue examined in the judgment. The Revenue sought to deny the credit based on the vehicle numbers mentioned in the invoices. However, the Tribunal noted the lack of further investigation by the Revenue and absence of evidence showing non-receipt of inputs by the appellant. As a result, the denial of credit and penalty imposition were considered unjustified and set aside.

5. Lastly, the penalty imposed on the Director of the Company was addressed. Since the penalty on the main appellant was set aside, the penalty on the Director was also deemed unwarranted and subsequently set aside. The judgment concluded by disposing of the appeals in the manner detailed above.