2018 (10) TMI 466 - AT - Central Excise

Extended period of limitation - Penalty - recovery of CENVAT Credit - Manufacture of parts of wind power generator - case of appellant is that these chequered steel sheets and aluminium sheets were exempted from payment of duty - N/N. 12/2012-CE - Having admitted its mistake and paying duty without any resistance on the one hand, whether the assessee could challenge the same, indirectly, on the ground of limitation? - Held that - From the decision of the Hon ble High Court of Karnataka in the case of Commissioner of Central Excise, Bangalore-I Vs. MTR Foods Ltd. 2012 (10) TMI 165 - KARNATAKA HIGH COURT , the Hon ble High Court has dismissed the Department appeal filed against the Order of CESTAT where the Bangalore Bench of the Tribunal had without going into the merits of the matter, set aside the impugned Order therein solely on the ground of limitation. Since the assessee has not challenged the legality of the duty demand, it is not necessary to give a finding on the invocation of extended period of limitation. This is because if the plea of the appellant is accepted then that may lead to an anomalous situation where the appellant having paid the duty without challenging the assessment order, would be heard praying to quash the assessment order indirectly on the ground of technicalities. Penalty - Held that - The appellant had paid the duty before of issuance of Show Cause Notice, it is a fit case to exercise the jurisdiction under Section 80 - Penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Challenge against the invocation of extended period of limitation and imposition of penalty.

Analysis:
The appellant, a manufacturer of sheet metal components and wind power generator parts, availed CENVAT Credit on chequered steel and aluminum sheets. A Show Cause Notice was issued for recovery of CENVAT Credit, leading to an Order-in-Original with interest and penalty. The appeal before the Tribunal challenged only the extended period of limitation invoked by the Revenue, not the merits of the case.

The appellant admitted the inadmissibility of CENVAT Credit on the sheets used for wind power generators. They reversed the credit after an audit in January 2016. The Tribunal considered precedents like the Karnataka High Court decision and the Ahmedabad CESTAT case, emphasizing that since the appellant did not challenge the duty demand, the issue of limitation could not be entertained. The Tribunal noted that allowing challenges based on technicalities after paying duty could create an anomalous situation.

Considering the appellant's admission of mistake, payment of duty, and reversal of credit before the Show Cause Notice, the Tribunal exercised jurisdiction under Section 80 to set aside the penalty imposed by the first appellate authority. The appeal was allowed partly on this basis.

In conclusion, the Tribunal upheld the decision to set aside the penalty but did not entertain the challenge against the extended period of limitation due to the appellant's actions. The judgment highlighted the importance of not challenging assessments based on technicalities after paying duty and emphasized the need for consistency in such matters.