2022 (1) TMI 1121 - AT - Central Excise

Utilization of balance of Cess credit after 01.03.2015 for payment of Central Excise Duty - contravention of provisions of Rule 3(7)(b) of the CENVAT Credit Rules 2004 read with Notification No. 12/2015-C.E.(N.T.) dated 30.04.2015 and Rule 4 of the Central Excise Rules 2002 - time limitation - HELD THAT - The issue stands covered by the decision of the Hon ble High Court of Delhi in the case of M/s. Cellular Operators Association of India 2018 (2) TMI 1264 - DELHI HIGH COURT wherein the Hon ble High Court has analysed the various contentions and held that Cess credit cannot be utilized for payment of Excise Duty after 01.03.2015 - the issue on merits has to be answered against the assessee and in favour of the Revenue. Time Limitation - HELD THAT - The details of the return filed by the appellant has been furnished wherein it can be seen that the appellant has mentioned in the return that they have utilized the credit availed on Education Cess and Secondary and Higher Education Cess for payment of Excise Duty. Though these returns were filed in May 2017 the Show Cause Notice has been issued only two years later invoking the extended period of limitation - there is no positive act of suppression established by the Department to prove that there is any wilful suppression of facts. The demand raised invoking the extended period of limitation cannot sustain and requires to be set aside - The appeal is allowed on the ground of limitation.

Summary

Issues:
Utilization of Cess credit for payment of Excise Duty after 01.03.2015, Grounds of limitation for invoking extended period, Allegations of suppression of facts by the appellant.

Analysis:
1. The case involved the appellant, engaged in manufacturing tractor accessories, grease, and lubricants, who utilized Cess credit for Excise Duty payment post 01.03.2015, despite abolition of Education Cess and Higher Education Cess. The Department alleged contravention of CENVAT Credit Rules and Central Excise Rules.
2. A Show Cause Notice was issued, leading to confirmation of demand, interest, and penalties by the Original Authority, upheld by the Commissioner (Appeals), prompting the appeal.
3. The appellant argued that post-amendment in CENVAT Credit Rules, there was no provision to lapse existing Cess credit, citing Supreme Court precedents on vested rights. They contended utilization post-GST introduction was valid, supported by timely ER-1 returns.
4. The appellant acknowledged adverse Delhi High Court judgment but challenged the limitation ground, citing ER-1 returns reflecting Cess credit utilization, negating suppression allegations.
5. The Revenue supported the impugned order, citing legal precedents disallowing Cess credit utilization post-01.03.2015, and argued against the appellant on limitation grounds, alleging willful suppression.
6. The Tribunal analyzed the issue of Cess credit utilization post-01.03.2015, referencing Delhi High Court and Tribunal decisions, upholding disallowance. The Tribunal also addressed the limitation aspect, ruling in favor of the appellant due to ER-1 return disclosures.
7. Consequently, the Tribunal set aside the impugned order, allowing the appeal solely on the ground of limitation, emphasizing the absence of willful suppression by the appellant, as evidenced by ER-1 returns.

This detailed analysis covers the issues of Cess credit utilization, limitation grounds, and suppression allegations, providing a comprehensive understanding of the legal judgment.