2023 (5) TMI 438 - HC - Central Excise

Wrongful abatement of MODVAT credit - demand barred by time limitation or not - whether the quantum was justified in allowing appeal without ascertaining the factual position for actual utilisation of input appropriate to be charged to the electric induction furnace? HELD THAT - After noting the legal requirement the Tribunal examined the factual position and pointed out that there is no allegation of misstatement or suppression made by the department at any stage of the proceedings. More particularly when all the documents were produced by the assessee examined by the revenue and thereafter the final assessment was made. Therefore, the Tribunal held that extended period of limitation could not have been invoked by the revenue and that the entire demand is barred by limitation. The Tribunal was of the view that while referring the matter to this Court referred the question as to whether Tribunal was justified in allowing the appeal without ascertaining factual position of actual utilisation. The question of limitation is a legal issue, which is required to be decided taking note of the relevant facts. If on facts, the Tribunal had come to the conclusion that the demand was barred by limitation nothing prevented the Tribunal from granting relief to the assessee on the said ground and there would be no occasion to examine the merits of the matter as such the exercise will be a sheer academic exercise. Thus, the Tribunal rightly took note of the undisputed fact that held that extended period of limitation could not be invoked. There are no ground to interfere with the order passed by the Tribunal - appeal dismissed.

Summary

Issues involved:
The judgment involves the examination of whether the demand was justified in allowing the appeal without ascertaining the factual position for actual utilization of input appropriate to be charged to the electric induction furnace. The key issue was whether the extended period of limitation could be invoked by the revenue.

Factual Position and Examination:
The Tribunal examined the factual position in detail, considering the show cause notice issued for alleged wrongful abatement of MODVAT credit. The appellant contended that proper declarations were filed, materials were produced, returns were regularly filed, and documents were defaced by the Central Excise Authority without objection. The Central Excise Officers visited the factory regularly, verified records, and no discrepancies were found. The Tribunal noted that defacing documents is a formality to prevent misuse, and the genuineness of duty-paying documents is verified before defacement. The Tribunal found no deliberate misstatement or suppression of facts by the assessee.

Extended Period of Limitation:
The Tribunal held that the extended period of limitation could not be invoked by the revenue as there was no allegation of misstatement or suppression, and the demand was barred by limitation. The final assessment of RT-12 returns was done after thorough examination, and the revenue did not establish any deliberate acts by the assessee to withhold information. The Tribunal emphasized that the legal requirement for invoking the extended period of limitation was not met by the revenue.

Decision and Conclusion:
The Court dismissed the appeal, finding no grounds to interfere with the Tribunal's order. It was concluded that the Tribunal rightly held that the extended period of limitation could not be invoked, and the demand was barred by limitation. The question referred for consideration was answered against the revenue, highlighting the importance of factual examination in legal issues related to taxation matters.