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TMI Blog2022 (8) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... 28044090 having central excise duty liability @ 12% and Medical Oxygen classifiable under Tariff Heading 28044090 having NIL rate of duty. During the course of scrutiny of periodical ER-1 returns of the Appellant for the period under dispute, it was observed that the Appellant has availed cenvat credit on the inputs for which they neither submitted ER-5 returns nor ER-6 returns. The department is of the view that the Appellant has used common inputs for manufacture of dutiable goods as well as exempted goods, and on the said common inputs, cenvat credit has been availed. Therefore, the Appellant is required to pay 8%/10% of the value of the exempted goods i.e. medical oxygen. Accordingly, a show cause notice dated 11.04.2014 had been issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey have failed to discharge. Hence, the demand is partially time-barred. The present case has been based on the audit objection by scrutinizing the financial records of the Appellant. It is well settled law that, extended period cannot be invoked if the demand is based on audit objection. The Appellant relied upon various case laws in support of his submissions. (ii) On the merits of the case, he submitted that demand of central excise duty is also not sustainable. He submitted that they have reversed the proportionate cenvat credit which has been availed for manufacture of exempted goods. He further submitted that it is a well settled law that when cenvat credit is reversed, it amounts to cenvat credit not been taken. He relied upon fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smalle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." [Emphasis supplied] XXXXXXXXXXXXXXX 17. In fact, the Act contemplates a positive action which betrays a negative intention of willful default. The same was held by Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore - (2003) 3 SCC 410 = 2003 (152) E.L.T. 39 (S.C.) wherein this Court held :- "31. It is settled law that for invoking the extended period of limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult which actually comes to pass... An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done..." By respectfully following the abovementioned law laid down by the Hon'ble Supreme Court, I hold that the demand for the period 01.04.2009 to 31.03.2013 is time-barred and is hereby set aside. 7. As far as demand for the normal period is concerned, I find that the Appellant has reversed the proportionate cenvat credit which has been availed in the manufacture of exempted goods. This Tribunal in the case of Star Agri Warehousing and Collateral Management Ltd. Vs. CCE, Jaipur, (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workable. By means of proportionate reversal the requirement of Rule 6(3) has been substantially satisfied. This is also provided in Rule 6(3D) of the Cenvat Credit Rules which was introduced at a later date". 11. In view of above discussion, we find no merit in the order-in-original. Accordingly, we set aside the same and allow the appeal." 8. The Hon'ble Supreme Court of India in the case of CCE Vs. Precot Meridian Ltd., (supra) has held as follow: "3. We note that five-Member Bench of the Tribunal in the case of 'Franco Italian Co. Pvt. Ltd. v. Commissioner' [2000 (120) E.L.T. 792 (T.-LB)] had taken the view that even if the MODVAT credit was utilised but, thereafter, refunded, it would amount to not utilising the said MODVAT credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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