2023 (10) TMI 644 - AT - Central Excise

100% EOU - Debonding - Utilization of accumulated Cenvat credit - amount of the counter-veiling duty payable at the time of de-bonding 100% EOU can be paid from the accumulated Cenvat credit by an EOU Unit or not - Extended period of limitation - HELD THAT - This issue is no longer res-integra as this issue in the case of Dishman Pharmaceuticals and Chemicals Pvt. Limited vs. UOI 2015 (12) TMI 1211 - GUJARAT HIGH COURT where it was held that various assessees, including the assessees situated within the jurisdiction of Ahmedabad Commissionerate have been given benefit of paying the excise duty foregone from the Cenvat credit account. Under the circumstances, prima facie, there appears to be no reason to deny such benefit to the petitioners. It is found that the appellant unit was right in paying amount of counterveiling duty from the accumulated Cenvat credit and therefore the appeal on merit succeeds. Extended period of limitation - HELD THAT - Since the appellant have made a detailed declaration before the proper officer of the department regarding the facts of payment of various kinds of the dues and utilisation of Cenvat credit in the month of August, 2012 and department has already issued a no-dues certificate on 13.10.2012 to the appellants therefore, making allegation of any suppression of facts, misdeclaration or any other contravention with an intention to evade duty are not present in this case. Since the entire demand is beyond normal period, the same is hit by period of limitation and therefore, unsustainable. The impugned order-in-original is without any merit and we set-aside the same. Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the applicability of time limitation for issuing a show cause notice, the utilization of Cenvat credit for payment of duty, and the validity of the demand raised by the department.

Time Limitation Issue:
The appellant argued that the show cause notice issued beyond the normal period of limitation is barred due to no suppression of facts or intention to evade duty. They highlighted that a no dues certificate was issued at the time of de-bonding the unit, including details of duty payment utilizing Cenvat credit, without any objection from the department. The argument was supported by the absence of misdeclaration or fraud, making the notice time-barred.

Utilization of Cenvat Credit:
The appellant, a 100% EOU unit, contended that they paid the counterveiling duty portion using Cenvat credit, permissible under the law. They emphasized their liability to pay excise duty under the Central Excise Act, not custom duty, supported by relevant legal provisions and judicial precedents. The Tribunal cited a case where similarly situated entities were allowed to discharge excise duty from Cenvat credit, establishing a precedent for such payments.

Validity of Demand Raised:
The Tribunal found in favor of the appellant, stating that the payment of counterveiling duty from accumulated Cenvat credit was correct. They also noted that the appellant had made a detailed declaration to the department regarding duty payment and Cenvat credit utilization, with a no-dues certificate issued subsequently. Allegations of suppression of facts or intent to evade duty were deemed absent, rendering the demand beyond the normal period unsustainable. The decision was further supported by a Tribunal ruling on the ground of limitation.

Conclusion:
The Tribunal held that the order-in-original lacked merit and was set aside, allowing the appeals of both the appellant and the Assistant Manager. The judgment emphasized the legality of utilizing Cenvat credit for duty payment and the absence of suppression of facts or misdeclaration. Both appeals were allowed, with the decision pronounced openly on a specified date.