2023 (11) TMI 217 - AT - Central Excise

Time Limitation - suppression of facts or not - CENVAT Credit - capital goods used in the captive power plant installed outside the factory - period June 2012 to December 2012 - HELD THAT - From the correspondence and certificate issued by the Deputy Commissioner of Central Excise-Division-IV, Ahmedabad, it is absolutely clear that the fact about installation of capital goods in the factory premises of Nandan Exim Limited and availment of cenvat credit there on by the Respondent was very much disclosed by the Respondent and was in the knowledge of the department. The appellant also filed their ER-1 return during the relevant period wherein the availment of Cenvat Credit on such capital goods was categorically declared. Therefore, there are no suppression of fact on the part of the Respondent. The adjudicating authority has correctly considered the fact on demand being time barred. Even though there is some discrepancy in the Plot No./ Survey No. in the address, it was categorically declared to the department that the capital goods were installed in the factory of Nandan Exim Limited. On the basis of this Certificate issued by the department, entire facts of availment of credit on capital goods by the respondent, installation of capital goods at the factory premises of Nandan Exim Limited were in the knowledge of the department. On the basis of such information, the department could have conveniently issued the show cause notice if at all they feel any discrepancy to the appellant will within the normal period of one year. However, in respect of credit taken during June 2012 to December 2012, the show cause notice was issued on 31.03.2015 i.e. more than two years after the date of taking credit. There are no hesitation to hold that the demand was wrongly made under the extended period in the show cause notice - the adjudicating authority has rightly dropped the proceedings on limitation. Appeal of Revenue dismissed.

Summary

Issues Involved:
The issues involved in the judgment are the availing of cenvat credit on capital goods for installation of a power plant under EPCG license, the eligibility of such credit under the Cenvat Credit Rules, 2004, and the applicability of the extended period for demanding the cenvat credit.

Issue 1: Availment of Cenvat Credit on Capital Goods for Power Plant Installation
The respondent, engaged in manufacturing polyester filament yarn, availed cenvat credit on capital goods for installing a power plant under an EPCG license. The department contended that the credit availed on the power plant was incorrect as it was installed outside the factory for captive use, which was deemed impermissible as capital goods. The department argued that the rules were amended in 2011 to make duty paid on such capital goods eligible for cenvat credit, but the respondent availed the credit before this amendment. A show cause notice was issued in 2015 demanding the cenvat credit availed during 2012-2013, invoking the extended period. The adjudicating authority dropped the proceedings against all notices, leading to the Revenue's appeal.

Issue 2: Applicability of Cenvat Credit Rules and Limitation
The Revenue contended that the credit on capital goods installed outside the factory for electricity generation was not allowed during the period when the goods were received, as per the Cenvat Credit Rules prevailing at that time. The respondent argued that the credit was taken after the amendment in 2011 and that the rules in force at the time of credit availing should apply. The respondent also highlighted that the department was informed about the cenvat credit availed on the capital goods, and there was no suppression of facts. The bench found that the demand for cenvat credit was time-barred, as the department had knowledge of the installation of capital goods and the credit availed by the respondent, making the demand under the extended period invalid.

Conclusion:
The appellate tribunal upheld the impugned order, dismissing the Revenue's appeal on the grounds that the demand for cenvat credit was not sustainable due to the limitation issue. The bench found that the department had knowledge of the facts regarding the installation of capital goods and the cenvat credit availed, and therefore, the demand made under the extended period was incorrect. The judgment emphasized that without delving into the merits of the case, the demand for cenvat credit could not stand solely on the grounds of limitation.