2022 (4) TMI 250 - AT - Central Excise

CENVAT Credit - CVD paid by debit entries in DEPB - rejection of credit on the ground that no credit can be availed on duty payment made through debit in their DEPB, stating that such debit does not constitute as payment of duty - Suppression of facts or not - barred by time limitation - HELD THAT - Admittedly the appellant was a registered assessee and were maintaining proper books of accounts in the ordinary course of business. Further, the appellant was regularly filing their periodical returns with the Department. It is not the case of the Department that the appellant was not filing their periodical returns or had left any column in the return blank, resulting in suppression of any material information. The show cause notice is based on information derived from the record of the appellant. Further, the stand of the appellant in taking credit of CVD, which have been paid through DEPB (Duty Entitlement Pass Book) Scheme is bonafide. Also, such credit is held to be in order, as held by Delhi High Court in COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX LTU NEW DELHI VERSUS HAVELLS INDIA LTD 2015 (10) TMI 1553 - DELHI HIGH COURT and in COMMISSIONER OF CENTRAL EXCISE COMMISSIONERATE, LUDHIANA VERSUS M/S NEEL KANTH RUBBER MILLS 2010 (4) TMI 281 - PUNJAB HARYANA HIGH COURT . The show cause notice is hit by limitation, there is no element of suppression or fraud etc. - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the show cause notice is hit by limitation.

Analysis:
The appeal involved the issue of whether the show cause notice was barred by limitation. The Appellant, engaged in manufacturing two-wheelers, imported inputs and capital goods for production, availing benefits under the Duty Entitlement Pass Book (DEPB) Scheme. The Department objected to the Appellant availing Cenvat credit on duty payment made through DEPB debit entries, leading to a show cause notice (SCN) dated 20.09.2007 proposing a demand for Cenvat credit, interest, and penalty. The Appellant's reply was filed on 22.10.2007. The demand was later confirmed by the Deputy Commissioner in an Order-in-Original dated 28.08.2018, prompting the Appellant to appeal before the Commissioner (Appeals).

The Commissioner (Appeals) upheld the Order-in-Original on merits and limitation but set aside the penalty. The Appellant then appealed against this decision. The Appellant contended that they were a registered manufacturer, maintained proper records, and regularly filed returns. They argued that there was no specific requirement to inform the Department about the mode of CVD payment. The show cause notice alleged intentional suppression of facts, invoking the extended period of limitation.

The Appellant cited the Precision Pipes and Profiles Ltd. case where non-disclosure of CVD payment mode in returns did not amount to fraud or suppression. They also referred to rulings allowing Cenvat credit for CVD paid through DEPB. The Revenue relied on the impugned order. The Member (Judicial) observed that the Appellant maintained proper accounts, filed returns regularly, and there was no allegation of non-filing or suppression in returns. The SCN was based on information from the Appellant's records. The Member found the Appellant's credit of CVD paid through DEPB to be bonafide, citing decisions by Delhi and Punjab & Haryana High Courts.

Consequently, the Member held that the show cause notice was time-barred, lacking suppression or fraud. The appeal was allowed, the impugned order set aside, and the Appellant entitled to consequential relief as per the law. The decision was pronounced in open court, granting relief to the Appellant based on the findings regarding the limitation issue.