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2022 (10) TMI 56 - AT - Central ExciseScope of SCN - time limitation - Disallowance of transitional Modvat credit - Levy of penalty upheld - invocation of extended period of limitation to deny Modvat credit for contravention of provisions of Rules 57H(1)(b), 57G, 173G and 173B of the Central Excise Rules, 1944 - suppression of facts or not - HELD THAT:- The Ld. Joint Commissioner has observed that the assessee has suppressed the fact of availing the benefit of SSI exemption under Notification No. 1/93-CE by not paying the duty on finished goods during the period in dispute i.e. 1994-95, which allegation was not made in the SCN dated 02.04.1996 and, therefore, the proceedings have travelled clearly beyond the scope of allegations made in the SCN which cannot be legally sustained. The main reason that has been assigned to disallow the credit in the impugned order is that the Appellant has availed the aforesaid SSI exemption which was never alleged in the SCN. The Department was aware of the fact with regard to the availment of above exemption since that has been duly disclosed in the quarterly excise returns, though belatedly filed, and hence the same was within the knowledge of the Department at the time of issuance of the SCN. It is a settled legal position that when the assessee was not put to notice with regard to the reasons basis which the demand is being sought to be made, the proceedings cannot be legally sustained. Hence, the demand is liable to be quashed on this ground alone. Time Limitation - HELD THAT:- The very basis of invocation of extended period of limitation is the alleged wrong availment of exemption notification, which also cannot be sustained when no such allegation was ever made in the SCN - the only allegation in the SCN was with regard to availment of transitional credit of Modvat in terms of Rules 57G and 57H. Both the Authorities below have duly noted that the required declaration under Rule 57G was duly filed by the assessee on 20.12.1994 wherein the assessee communicated its intention to avail the said credit which facts are not in dispute. Moreover, declaration under Rule 57H has also admittedly been submitted on 19.09.1995 which is on record - the authorities below have erred in invoking the extended period of limitation. The duty demand cannot be legally sustained, the same is set aside - Appeal allowed - decided in favor of appellant.
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