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2016 (6) TMI 824 - CESTAT HYDERABAD

2016 (6) TMI 824 - CESTAT HYDERABAD - TMI - Demand of duty - disallowance of credit availed on MS items - extended period of limitation - Reduction in penalty - Held that:- the assessee's contention that prior to the judgment in Vandana Global Ltd. [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB)] case, they entertained a bona fide belief that credit is admissible is not without force. Further Revenue has not adduced any evidence to establish that there was suppression of facts with intent to evade pa .....

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r demand is not tenable in such a situation. - The show-cause notice is barred by limitation. In the result, the impugned order is set aside and appeal filed by assessee is allowed with consequential reliefs - Decided in favor of assessee. - Appeal No. E/2255, 2453/2012 - Dated:- 29-2-2016 - Ms. Sulekha Beevi, C.S., Member(Judicial) Ms. Rukmani Menon, Advocate for the assessee Shri Raj Kumar Varma, Authorised representative for the Revenue ORDER [ Order per: Sulekha Beevi, C.S. ] The above t .....

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nt and are availing facility of CENVAT credit on inputs and capital goods. A show-cause notice was issued alleging that assessee availed irregular credit on MS items used for erection and fabrication works in assessee s premises at Boyireddipalli during the period 9/2006 to 5/2008 to the tune of ₹ 24,08,656/-. The assessee reversed the credit on 19/06/2008 and 20/03/2009 in their CENVAT account. After due process of law, the original authority vide order dt. 22/12/2011 confirmed the disall .....

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n of penalty. 3. During the setting up of their new unit at Boyireddipalli, the assesses had given civil contracts to certain firms and the work of steel fabrication was given to M/s. Hajee A.P. Bava & Co. The assessee had purchased both TOR steel and structural steel. They did not avail credit on TOR steel used in civil construction works. The assessee availed credit on structural steel (M.S. items) used in the fabrication works of M/s. Hajee A.P. Bava & Co. On verification of equipment .....

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iled on steel used in fabrication of walk-ways within the plant area, as inserts used in civil work by M/s. GDC Ltd. (civil contractors) and for wagon loading shed outside the factory. The assessee reversed the credit on various dates and informed the reversal to the department vide letter dt. 16/09/2009. 4. The main defence raised by assessee on merits in their reply to show-cause notice is that prior to the amendment to the definition of input in Rule 2(k) of CENVAT Credit Rules, 2004, the cre .....

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2010. She submitted that the appellants had disclosed the availment of credit in ER-1 returns. That this is clear from the show-cause notice itself. The issue whether credit is admissible on structural items used for fabrication of shed, building etc. was contentious and it was referred to the Larger Bench. The appellants availed the credit on these structural items on the bona fide belief that credit is admissible. That the assessee furnished all details called for by department and there is no .....

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ch of Tribunal in Vandana Global Ltd. [2010(253) ELT 440 (Tri. LB)] has held that credit is not admissible on MS items used for shed, building etc. and that the amendment brought forth to Rule 2(k) applies retrospectively. 7. I have heard both sides. The learned counsel for appellant has strongly contested the issue of limitation. According to her, there was no suppression and therefore the extended period is not invokable. The show-cause notice was issued based on the details shown by assessee .....

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ssible on structural items / MS items for use in shed, building etc. was a contentious one and the issue was referred to Larger Bench. There were decisions in favour of the assessee as well as the Revenue prior to the judgment laid in Vandana Global Ltd. case. 8. The Larger Bench in Vandana Global Ltd. case concluded that in order to avail credit, the capital goods should be excisable goods and when permanently embedded to earth, they cannot be treated as inputs. Prior to this judgment, the issu .....

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ence to establish that there was suppression of facts with intent to evade payment of duty. I find that Revenue has miserably failed to establish sufficient ground to invoke the extended period. 9. In Mundra Ports & SEZ Vs. CCE &Cus. [2015-TIOL-1288-HC-AHM-ST], the Hon ble High Court observed that the Larger Bench of the Tribunal in the case of Vandana Global Ltd. (supra) has not clarified as to what is the aid resorted to by the Tribunal to conclude that the amendment to Rule 2(k) is re .....

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proviso to Section 11A of the Act accompanied by very strong word as fraud or collusion and therefore, has to be construed strictly. Mere omission to give correct information is not a suppression of facts unless it was deliberate to stop the payment of duty. The incorrect statement cannot be equated with willful misstatement. Similarly, the Hon ble Supreme Court in the case of Commissioner of C.Ex., Bangalore V. Karnataka Agro chemicals 2008(227) ELT 12 (SC) held that it is well settled that mer .....

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