Custom, Excise & Service Tax Tribunal
Guntur - G S T vs Emjay Steels Udyog Pvt Ltd on 9 May, 2019
(1) Appeal No. E/31156/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench - Court - I
Excise Appeal No. 31156 of 2018
(Arising out of Order-in-Appeal No. GNT-EXCUS-000-APP-83-18-19, Dt. 29.06.2018 passed
by Commissioner of Central Excise, Customs & Service Tax, Visakhapatnam)
Commissioner of Central Tax .. APPELLANT
GUNTUR G.S.T.
C.R. Buildings,
Kannavarithota,
GUNTUR - 522004.
Andhra Pradesh
VERSUS
Emjay Steels Udyog Pvt. Ltd. .. RESPONDENT
S.No. 62-3, A1 & A2, Vengamambapuram Village, Naidupeta Mandal, SPSR, Nellore District.
Andhra Pradesh - 524 402.
APPEARANCE:
Shri B. Guna Ranjan, Superintendent/AR for the Appellant. None for the Respondent.
Coram:
Hon'ble SHRI P. VENKATA SUBBA RAO,MEMBER (TECHNICAL) FINAL ORDER No. A/30514/2019 DATE OF HEARING: 09.05.2019 DATE OF DECISION: 09.05.2019 [ORDER PER: Mr. P.Venkata Subba Rao)
1. None appeared on behalf of the respondent despite notice. Heard Ld. Departmental Representative and perused the records.
(2) Appeal No. E/31156/2018
2. The respondent herein is a Central Excise registrant who manufactures steel and steel products and avails CENVAT Credit on their inputs and capital goods. During audit it was noticed that they had taken CENVAT Credit on input services during the months of November 2014 and December 2014 of an amount of Rs. 21,29,851/- beyond the period of six months from the date of issue of invoices. During the relevant period, in terms of Rule 9 (1) of CCR 2004, CENVAT Credit could be taken by the assessee only within six months from the date of issue of invoices. On being pointed out, the respondent reversed the CENVAT amount in their CENVAT account and reflected the same in their ER1 returns in the month of April 2016. Subsequently, a show cause notice dated 02.12.2016 was issued invoking the extended period of limitation demanding to recover the CENVAT credit of the aforesaid amount along with interest. It was also proposed to appropriate the amount already reversed by them towards demand as also proposed to impose penalty under Rule 15(2) of CCR 2004 read with Section 11AC of the Central Excise Act, 1944. After following due process, the original authority confirmed the demand without interest on the ground that they had always maintained sufficient balance in their CENVAT account to cover the disputed amount. However, he imposed a penalty of equal amount under Rule 15(2) of CCR 2004 read with Section 11AC of the Central Excise Act, 1944.
3. Aggrieved, the appellant appealed to the first appellate authority who upheld the confirmation of demand by the lower authority but set aside the penalty. Aggrieved by this order of the first appellate authority, the present appeal is preferred by Revenue. It is the contention of the Revenue that as held by Hon'ble Supreme Court in the case of Dharmendra Textile Processors & Others reported in [2008(231)ELT 3 (S.C)], once the element of fraud etc. relating to the extended period of limitation has been established, the mandatory penalty has to be imposed. They would submit that the onus is on the Revenue to establish that the extended period of limitation is applicable. Once that hurdle is crossed by the revenue, the assessee is exposed to mandatory penalty. Since the Commissioner (Appeals) upheld the demand for extended period, he could not have waived the mandatory (3) Appeal No. E/31156/2018 penalty. The order of the Commissioner (Appeals) is therefore, not correct and may, therefore, be modified and the penalty imposed by the lower authority may be restored.
4. I have considered the arguments made and perused the records of the case. Para 4 of the show cause notice reads as follows:
"The assessee have not intimated to the department for utilizing the CENVAT Credit on the above said amount and even in the ER.1 returns filed by them from time to time. The fact was detected only after verification of the records by the Central Excise Officers. The credit taken by the assessee appears to be irregular in terms of Rule 9(1) of CENVAT Credit Rules, 2004 and proviso 5 of Rule 4(7) of CENVAT Credit Rules, 2004. Even then, it appears that the assessee has taken CENVAT Credit with an intent to evade payment of duty. Thus, it appears that the assessee suppressed the facts from the knowledge of department and contravened the provisions of the Central Excise Act, 1944 and Rules made there under with an intent to evade payment of duty. Therefore, it appears that the extended period under Section 11A(4) of the Central Excise Act, 1944 is rightly invokable in the present case for recovery of irregular CENVAT credit on input services during the period November 2014 and December 2014 along with interest under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11AA of Central Excise Act, 1944 and penalty imposable under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944."
5. As can be seen, the allegation in the show cause notice with respect to invocation of extended period of limitation is that the assessee has suppressed the fact that they have availed CENVAT Credit on the invoices in contravention to Rule 9(1) of CCR 2004 on the department inasmuch as they did not indicate so in their ER.1 returns. They have also not provided copies of the invoices along with returns. Thus, there was a suppression of fact and extended period of limitation is invoked. The lower authority has held that there was suppression of fact in this case and therefore imposed penalty. The first appellate authority relied on the case laws of Bill Forge Pvt. Limited [2012(279)ELT 209 (Kar.)] and Adecco Flexione Workforce (4) Appeal No. E/31156/2018 Solutions Limited [2012(26)STR 003 (Kar.)] and after considering the facts of the case, came to the conclusion that intent to evade tax cannot be attributed to the appellant. Accordingly, he set aside the penalty. As the department is now insisting on the imposition of penalty on the ground that once extended period of limitation is invoked, penalty cannot be set aside, I proceed to decide this question of extended period of limitation. It is not in dispute that the appellant has availed CENVAT Credit in contravention of Rule 9(1) of CCR 2004 as it stood during the relevant period. They did not submit invoices for details of CENVAT Credit availed in their E.R 1 returns. The show cause notice alleges that this amounts to suppression of facts. It is a well settled principle that to allege suppression, it must be shown that something which has to be disclosed by the assessee has not been disclosed. In this case, there is no requirement in the E.R 1 returns to give invoice wise details of CENVAT Credit availed. There is also no requirement of providing copies of invoices along with E.R 1 returns. Therefore, it cannot be held that the appellant had suppressed the facts from the department. It is open for the officer assessing the ER 1 returns to call for details but they are not required along with the return. Violation of rule 9(1) is established but there is no evidence of intent to evade. Therefore, the extended period of limitation cannot be invoked. There is no doubt that there was contravention of Rule 9(1) as it stood during the period but apart from the allegation that there was an intent, there is nothing in the entire show cause notice to show for support of this allegation of malafide intention. Therefore, in the show cause notice itself, I find that there is no ground to invoke the extended period of limitation. In fact, the respondent could have contested the demand itself instead of reversing the amount, however they did not contest and chose to pay the time barred demand. They also did not contest the demand at the adjudication or the first appellate stage and also did not file any appeal against the order of the first appellate authority. In conclusion, I find that there were no elements necessary for invoking extended period of limitation in this case. Therefore, the burden referred to by the Revenue in their appeal has not been crossed by Revenue. The demand itself is time barred. However since there is no appeal of the appellant regarding demand before me in this case, no order is being passed (5) Appeal No. E/31156/2018 regarding the demand. As far as the mandatory penalty is concerned, since the element necessary for invoking the extended period of limitation was absent in the show cause notice itself, no penalty can be imposed upon the appellant.
6. In view of the above, the impugned order is upheld and the appeal is rejected.
(Dictated and pronounced in open court) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) vrg