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2023 (2) TMI 1091 - AT - Central ExciseCENVAT Credit - distribution of common input services - credit availed on the basis of ISD challans raised by their Corporate Office situated in Chennai and four Regional Offices situated in Hyderabad, Bangalore, Chennai and Cochin - Department alleged that the credit availed on quantity based distribution is in violation of amended Rule 7 of Cenvat Credit Rules, 2004 - extended period of limitation - HELD THAT:- Section 11A of Central Excise Act, 1944 empowers the Central Excise Officer to initiate proceedings where duty has not been levied or short levied within 6 months from the relevant date but this period to commence proceedings under proviso to the said section stands extended to 5 years if the duty could not be levied or it was short levied due to fraud, collusion, willful misstatement or suppression of facts. A bare reading of the proviso to Section 11A indicates that it is in nature of an exception to the principal clause. Therefore, its exercise is hedged on one hand with existence of such situations as have been visualised by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this proviso and invoke the exceptional power - However, it is the settled cannon of decision that when the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. Except that in few of the statements by ISD invoices in one of the columns, the credit was distributed by specifying turnover as “quantity based” and in some other it was on “allocation weight”. It is observed in terms of Circular No. 178/4/2004-S.T. dated 11.07.2014 as relied upon by the department, the distribution as per allocation weight is also based on turnover, hence, apparently such distribution is also in compliance of Rule 7(d) of CCR, 2004. Extended period of limitation - HELD THAT:- There is no willful intent of any of the three appellants to evade their duty/tax liability. Hence, there cannot be suppression on the part of the appellant as alleged and confirmed. The appellant was availing and utilizing such amount of Cenvat credit as was distributed by their ISD. The question of suppression or evasion does at all arise in such a case at least against the appellants who were the receivers of the distributed Cenvat credit. They otherwise were regularly mentioning the availment/utilized amount in their ER returns. In light of these findings, we hold that the department was not entitled to invoke the extended period of limitation. Hence, the major demand for the period w.e.f. August, 2012 to March 2016 is liable to be set aside. The demand even for the normal period is also not sustainable - the interests and penalties has wrongly been invoked - Appeal allowed.
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