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2015 (5) TMI 168 - ALLAHABAD HIGH COURT

2015 (5) TMI 168 - ALLAHABAD HIGH COURT - 2015 (321) E.L.T. 200 (All.) - Invocation of extended period of limitation - Suppression of facts - Wrong availment of CENVAT Credit - Whether Tribunal was justified in holding that extended period of limitation under Rule 15 of the Cenvat Credit Rules, 2004 and Section 11 (A) (1) of the Central Excise Act, 1944 was not attracted in this case - Held that:- Reasons so disclosed in the order of the Commissioner have completely been ignored by the Tribunal .....

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redit is correctly claimed by them and proper records are maintained in that regard. - The assessee, in response to the show-cause notice had stated that there is no provision in Central Excise Law to disclose the details of the credit or to submit the duty paying documents, which in our opinion is false and an attempt to deliberately contravene the provisions of the Act, 1944 and the rules made thereunder with an intent to evade the duty. - facts of the present case clearly suggest willful supp .....

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atish Chandra,JJ. For the Appellant : B. K. S. Raghuvanshi, Sr. S. C. For the Respondent : Ashok Kumar, Praveen Kumar ORDER Heard Sri B.K.S. Raghuvanshi, learned counsel for the petitioner-department and Sri Ashok Kumar, learned counsel for the respondent-assessee. This Central Excise Appeal has been filed by the Commissioner, Customs, Central Excise & Service Tax, Ghaziabad against the Order No.ST/A/53147/2014-EX (DB) dated 24th July, 2014 passed by the Customs, Excise & Service Tax App .....

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11 (A) (1) of the Central Excise Act, 1944 was not attracted in this case?". Facts relevant for deciding the present central excise appeal are as follows: M/s. Rathi Steel and Power Ltd., Industrial Area, G.T. Road, Ghaziabad *hereinafter referred to as the "assessee") is engaged in manufacture of T.M.T./TOR Steel, S.S. Billets, S.S. Flat, M.S. Billet, etc. The assessee is also registered with Central Excise Department and was availing the facilities of Cenvat Credit on items, na .....

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um Bar etc. as "capital goods", when which did not appear to be admissible, as the above said items do not fall under the category of "capital goods" as defined under Rule 2 (a) of Cenvat Credit Rules, 2004 (hereinafter referred to as the "Rules, 2004"). It was also noticed that items in question were not covered under the inputs to be used in the manufacture of capital goods or the goods were in the nature of items, which were used in construction of factory shed, .....

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assessee by the Commissioner of Central Excise, Ghaziabad for demand and recovery of the Cenvat Credit wrongly availed and utilized along with interest in contravention of provisions of Rule 3 read with Rules 4 and 14 of Rules, 2004 read with Section 11A (1) and Section 11 AB of the Central Excise Act, 1944 (hereinafter referred to as the "Act, 1944"). The assessee was also called upon to show cause as to why penalty be not imposed under Rule 15 of Rules, 2004 read with Section 11AC of .....

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ed goods in contravention of the Act, 1944 and the Rules made thereunder. The assessee submitted its reply on 15th November, 2010. It was stated that detail correspondence had been exchanged between the assessee and the department, wherein full facts about Cenvat credit, were disclosed . There had been no deliberate concealment of any material fact. The assessee referred to the letter dated 19th November, 2008 issued by the range office and the reply where-under the details of credit taken by th .....

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ed 3rd September, 2009 asking for the credit of capital goods being granted, were referred to in support of the said plea. It was the case of the assessee that the department was all along aware about the Cenvat Credit availed of by the assessee during the relevant period. There was no doubt in the minds of the officers of the department about the admissibility of credit claimed by the assessee. The Range Officers visited the factory of the assessee in the last week of December, 2009 for verific .....

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also referred to. It was specifically contended that admissibility of the credit on steel items has been in dispute since long. There are various decision of various forums on the same. The Larger Bench of the Tribunal in the case of Vandana Global Ltd. Vs Commissioner of Central Excise, Raipur reported in 2010 (253) ELT 440 (Tri.-LB) for the first time finally denied the credit on these steel items, which are used for supporting structure of foundation of the capital goods. It was further conte .....

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19th November, 2011 confirmed the demand of cenvat credit at ₹ 75,61,749/- (BED) + ₹ 1,51,240/- (Education Cess) + ₹ 8286/- (S & H Ed. Cess) along with interest under Rule 14 of Rules, 2004 read with Section 11A (1) and Section 11AB of Act, 1944. Penalty to the tune of ₹ 77,21,275/- was imposed upon the assessee under Rule 15 of Rules, 2004 read with Section 11AC of Act, 1944 for contravention of the provisions of law. Not being satisfied with the order so passed, th .....

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the Tribunal has held that since the law had been declared by the Larger Bench under the aforesaid judgment and further since earlier orders were in favour of the assessee, no mala fide can be attributed to the assessee so as to invoke the longer period of limitation. There has been no suppression on the part of the assessee. The Tribunal has proceeded to set aside the demand of Cenvat credit along with penalty except for the demand of a sum of ₹ 54,000/-, which aspect of the matter has a .....

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itation under Rule 15 of Rules, 2004 read with Section 11A (1) of Act, 1944 was attracted in the facts of the case or not. Learned counsel for the department points out that the Tribunal has failed to appreciate that the assessee had knowingly and willfully indulged in availment of inadmissible Cenvat Credit on the pretext of capital goods against the items in question. He suppressed vital facts from the department and utilized the irregular Cenvat credit so availed for payment of central excise .....

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intained. From the records it was established that the assessee took nearly two years time i.e. between November, 2007 to September, 2009 to provide the complete information/ details. In support of the plea that the extended period of limitation could be invoked in the facts of the case, learned counsel for the department placed reliance upon following judgments of the Apex Court: 1. Commissioner of Central Excise, Visakhapatnam vs. Mehta & Company; 2011 (4) SCC 435, paragrah nos. 17, 21 and .....

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tems has been settled by the Larger Bench of the Tribunal in the case of Vandana Global Ltd. (Supra), which has been decided on 30th April, 2010, upto that date there were various orders of various forums in favour of the assessee on the subject. Therefore it cannot be said that there has been any deliberate suppression of material fact by the assessee, so as to invoke the extended period of limitation. He referred to the following judgments of the Apex Court: (1)Jai Prakash Industries Ltd. vs. .....

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tertaining a doubt about the view being taken, it necessarily rules out application of Section 11A of the Act, 1944 i.e. extended period of limitation would not be available. We have considered the submissions made by the learned counsel for the parties and have examined the records of the present central excise appeal. At the very outset, we may record that the findings of the Tribunal in the order under consideration qua the cenvat credit having been wrongfully availed of by the assessee on va .....

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itation would be available to the department or not. It would be worthwhile to reproduce the finding recorded by the Commissioner, Customs, Central Excise & Service Tax, Ghaziabad in paragraph no. 4.1.7, under his order dated 19th November, 2011, on the said aspect of the mater after considering the explanation furnished by the assessee to the show cause notice. The para reads as follows: "4.1.7. They submitted that since the admissibility of credit on steel items has been in dispute si .....

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he items were used for supporting structure and/or foundation, the credit could not be denied." We find that the reasons so disclosed in the order of the Commissioner have completely been ignored by the Tribunal only on the ground that the law on the legality of the Cenvat credit on the items in questions, has been declared by the Larger Bench in the year 2010 in the case of Vandana Global Ltd. (Supra), therefore, no mala fide can be attributed to the assessee, so as to justify the applicab .....

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credit could not be denied. It is apparently clear that the plea which has now been sought to be raised before the Court that the assessee had bona fide doubts with regard to the availability of cenvat credit on the items in question and that the law in that regard has been settled by the Tribunal in the case of Vandana Global Ltd. (Supra) is clearly an after thought and attempt to improve upon his explanation, as was furnished before the Commissioner wherein the assessee had admitted that steel .....

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o deliberately contravene the provisions of the Act, 1944 and the rules made thereunder with an intent to evade the duty. In our opinion, the facts of the present case clearly suggest willful suppression of material facts by the assessee as well as contravention of the provisions of the Act and rules framed thereunder with an intent to evade the demand of duty as would be covered by Clauses IV and V of Section 11 A (1) of the Act, 1944. Therefore, the invocation of the extended period of limitat .....

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d rightly result in invocation of extended period of limitation. (Reference paragraph no.12). Similarly in the case of Commissioner of Central Excise, Visakhapatnam vs. Mehta & Company (Supra), the Apex Court has explained that where the excisable goods are removed without payment of proper duty of excise, it is explicit that there was an intention on the part of the assessee to evade the payment of duty. (Reference paragraph no.22) The Division Bench of the Gujarat High Court in the case of .....

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