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2021 (12) TMI 1147 - AT - Central ExciseCENVAT Credit - eligibility to avail suo moto Cenvat Credit of Central Excise duty, without sanction by the proper department - invocation of extended period of limitation contained in the proviso to Section 11A of the Central Excise Act, 1944 - HELD THAT - The period in dispute involved in this case is October 2005 and the show cause notice was issued on 09.03.2009 i.e. much after the normal period prescribed under Section 11A ibid. Insofar as invocation of the proviso to Section 11A ibid is concerned, it has been mandated that only in the eventuality of happening of fraud, collusion, wilful mis-statement etc., such proviso clause can be invoked and not otherwise. On perusal of the case records, it is found that the availment of suo moto Cenvat Credit was highly disputed at the material time, which was subsequently settled by the Larger Bench of the Tribunal in the case of BDH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. (APPEALS), MUMBAI-I 2008 (7) TMI 78 - CESTAT MUMBAI . Since, the appellant had entertained the bona fide belief at the time of taking suo moto Cenvat Credit that it is entitled for the same as per the statutory provisions, in my considered view, the charges levelled against them regarding involvement in the activities, concerning fraud, collusion, wilful mis-statement etc., cannot be sustained. Hon ble Delhi High Court in the case of COMMISSIONER OF C. EX. VERSUS WONDERAX LABORATORIES, IPL. 2007 (10) TMI 388 - DELHI HIGH COURT has held that when conflicting views were taken with regard to interpretation of Notification etc., the proviso clause appended to Section 11A ibid cannot be invoked, justifying recovery of the short levied duty etc. beyond the normal period of limitation. The department in this case has not specifically adduced any evidence to substantiate that the appellant had really indulged into fraudulent activities in wrongly availing the Cenvat Credit - the extended period of limitation invoked in this case for initiation of show cause proceedings cannot stand of judicial scrutiny.
Issues Involved:
Whether the appellant is eligible to avail suo moto Cenvat Credit of Central Excise duty without sanction by the proper department. Analysis: The Tribunal considered the issue of eligibility of the appellant to avail suo moto Cenvat Credit without proper departmental sanction. The appellant contended that the extended period of limitation under Section 11A of the Central Excise Act, 1944 should not be invoked as the matter was contentious due to divergent views expressed by different benches of the Tribunal. The Tribunal noted that the disputed period was October 2005, and the show cause notice was issued much later in March 2009. It was emphasized that the proviso to Section 11A can only be invoked in cases of fraud, collusion, or wilful misstatement. The Tribunal found that since the appellant believed in good faith that they were entitled to the Cenvat Credit per statutory provisions, allegations of fraud or collusion could not be sustained. The Tribunal referred to a Larger Bench decision in the case of BDH Industries Ltd. vs. Commissioner of C. Ex. (Appeals), Mumbai-I, which settled the issue regarding the availment of suo moto Cenvat Credit. It was highlighted that conflicting views on interpretation of notifications could prevent the invocation of the proviso clause of Section 11A for recovery of short-levied duty beyond the normal limitation period. The Tribunal observed that the department failed to provide specific evidence of fraudulent activities by the appellant in wrongly availing the Cenvat Credit. Consequently, the Tribunal concluded that the extended period of limitation invoked for initiating show cause proceedings could not withstand judicial scrutiny. Therefore, the Tribunal set aside the impugned order dismissing the appellant's appeal and allowed the appeal in favor of the appellant solely on the ground of limitation.
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