Customs, Excise and Gold Tribunal - Tamil Nadu
Rupa And Co. Limited vs Commissioner Of Central Excise on 8 July, 2005
ORDER P.G. Chacko, Member (J)
1. The lower authorities have denied Modvat credit of Rs. 7,06,433/- to the appellants in respect of inputs which were available as such in stock or contained in semi-finished or finished products in stock as on 1.4.2003, the date on which their final products (knitted garments) became dutiable. Ld. Counsel for the appellants submits that the credit of duty paid on inputs not physically contained in semi-finished goods and finished products lying in stock as on 1.4.2003 has been disallowed to them. According to him, the relevant rule (Rule 9A of the Cenvat Credit Rules. 2002) requires to be construed in a liberal manner inasmuch as the legislative intent was to allow credit on inputs used in or in relation to the manufacture of the final product, whether directly or indirectly and whether contained in the final product or not. On the other hand. ld. SDR submits that, like erstwhile Rule 57H of the Central Excise Rules, 1944, Rule 9 ibid is a special provision and, therefore, the legislative intent underlying general provisions cannot be read into to it. Considering these submissions, I am not convinced that the appellants have a strong prima facie case on merits.
3. Ld. Counsel has also argued that the demand raised in the show-cause notice is barred by limitation. The relevant Modvat declaration was filed on 23.5.03, wherein the credit was claimed in respect of yarn (input as such), input contained in fabrics (intermediate) and those contained in finished goods as on 1.4.03. The appellants' claim was, thus, clearly indicated to the department. But it took more than one year for the department to issue the show-cause notice dated 8.7.04. This notice did not allege anything which could constitute a ground for invocation of the larger period of limitation. In the circumstances, according to ld. Counsel, the demand raised in the show-cause notice is hopelessly time-barred. In the face of ld. SDR's submission that the plea of limitation was never raised before, ld. Counsel has pointed out that such plea can be raised at the appellate stage for the first time. In this connection, he claims support from following decisions of the Tribunal.
1. CCE, v. Hiper
2. CCE v. Texmaco Ltd.
In the above cases, it was held that limitation was a point of law and the same could be pleaded for the first time at appellate stage. In this context, ld. SDR has cited a rival decision, which is the Tribunal's judgment in S.S. Bedi & Sons v. CCE, New Delhi 2002 (144) RLT 147 (Tri. Del), wherein the Tribunal rejected the plea of limitation raised by the assessee's Counsel after noting such plea had not been raised in the assessee's memorandum of appeal or at any earlier stage.
4. After careful consideration of the submissions, I find that, admittedly, the appellants did not challenge the demand on the ground of limitation, in their reply to the show-cause notice, nor did they choose to do so before the first appellate authority, nor before this Tribunal, This plea has, for the first time, come from the mouth of the Counsel. The limitation issue will revolve around this factual position. In both the cases cited by the Counsel, there was a plea of limitation made by the assessee before one or the other appellate authority. In the case of S.S. Bedi & Sons (supra), the assessee had never raised such plea at any stage of the proceedings. It was their Counsel who, for the first time, raised the plea before the Tribunal without there being such plea in the assessee's memorandum of appeal. In the circumstances, the Tribunal rejected the plea of limitation. Preponderance of case law is in favour of the Revenue. At this stage, ld. Counsel points out that, in the case of S.S. Bedi & Sons (supra), the larger period of limitation had been specifically invoked by the department, unlike in the instant case where the show-cause notice did not even refer to the provision pertaining to larger period of limitation. I find that this last plea of the Counsel is factually correct. The appellants seem to have a good case on limitation.
5. In the aforesaid circumstances, I am unable to call upon the assessee to predeposit any amount. Accordingly there will be waiver of predeposit and stay of recovery in respect of the duty and penalty amounts.
(Order dictated and pronounced in open court)