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TMI Blog2008 (9) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... he show cause notice alleging wilful mis-statement or suppression of facts or contravention of the provisions of the Central Excise Act or the Rules with intent to evade duty invoking proviso to Sub-Section (1) of Section 11A of the Act? (2) Whether filing of application before the Settlement Commission under Section 32E of the Act for waiver of interest penalty and immunity from prosecution- after suo motu paying the entire duty demand as per the show cause notice, does not amount to admission of the facts alleged in the show cause notice as regards mis-statement or suppression of facts or contravention of the relevant statutory provisions with intent to evade payment of duty? (3) Whether the Settlement Commission is required to record a specific finding regarding suppression of facts etc., and in the absence of any such finding, a conclusion cannot be drawn from admission of the facts alleged, so as to disentitle the applicant to take Cenvat credit under the Cenvat Credit Rules? 2. The dispute relates to taking of Cenvat Credit of additional duty. The Appellant, engaged in the manufacture of motor vehicle parts, such as, brake systems, brake assemblies and components th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quoted as under: "Rule7. Documents and accounts. - (1) The CENVAT credit shall be taken by the manufacturer on the basis of any of the following documents, namely :- … … … … … … … (b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or from his depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty of customs leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any provisions of the Act or of the Customs Act, 1962 or the rules made thereunder with intent to evade payment of duty." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the proviso to Section 11A of the Act. 7. We heard Shri A.R. Madhav Rao for the appellants and Shri H.K. Thakur, Joint C.D.R. for the Revenue at length. 8. Shri Madhav Rao submitted that having regard to the scheme of the Settlement under Chapter V of the Act, and particularly the provisions of Sections 32E and 32F, mere filing of the application before Settlement Commission can not be treated as admission of the guilty so as to give rise penal consequences. Counsel submitted that, no doubt, the applicant is required to make a full and true disclosure of his duty liability, but he may explain the circumstances in which the liability had arisen, which means that where the Settlement Commission is satisfied with the explanation that it may grant exemption from penalty and interest and immunity from proceedings. Counsel placed reliance on the case of Sir Shadi Lal Sugar and General Mills Ltd. v. Commissioner of Income Tax -1987 (31) E.L.T. T 325 (S.C.). 9. Shri H.K. Thakur, learned Joint CDR, submitted that the show cause notice was issued invoking the extended period. As the extended period can be invoked only in cases of fraud, collusion, suppression of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short levy on account of misclassification or otherwise of such excisable goods, to the Settlement Commission to have the case settled and any such application shall be disclosed of in the manner hereinafter provided:" (emphasis added) From a reading of the above, it would appear, as already indicated earlier, that the applicant is required to make a full and true disclosure of duty liability which has not been disclosed before the jurisdictional Central Excise officer and also "the manner in which such liability has been derived", apart from the other things. The clause, "the manner in which such liability has been derived" suggests that while admitting the duty liability - in full or part - the applicant can explain the circumstances in which he could not discharge the full duty liability giving rise to impugned show cause notice. He may not admit the entire alleged duty liability but he is required to make a full and true disclosure of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch liability has been derived"] redundant. 12. In the instant case, as seen above, the controversy has arisen in context of admissibility of the supplementary invoice in respect of additional duty in view of clause (b) of rule 7(1) of Cenvat Credit Rules in terms of which supplementary invoice cannot be taken as proof of payment of duty where duty had become recoverable on account of non-levy or short-levy by reason of fraud , collusion or willful misstatement or suppression of facts or contravention of any provisions of the Central Excise Act or Customs Act or Rules made thereunder with intent to evade payment of duty. In a nutshell, the benefit of Cenvat credit can be denied only in cases of fraud, collusion, etc., but the assessee can establish that no case of fraud, collusion etc. was made out against him. Thus, whether in the particular case, the benefit of cenvat credit has rightly been disallowed should be left to the appellate forum to consider. 13. In the above view of the matter, Issue Nos.2 and 3 are answered in the negative, that is, in favour of the assessee and against the Revenue, and it is held that the mere filing of application before Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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