Custom, Excise & Service Tax Tribunal
National Engineering Industries ... vs Commissioner, Central Excise & ... on 19 August, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. I
EXCISE APPEAL NO. 51129 OF 2022
(Arising out of Order-in-Appeal No. 120(SM)/CE/JPR/2021 dated 13.10.2021 passed
by Commissioner (Appeals), Central Excise and Central Goods and Service Tax, Jaipur)
National Engineering Industries Ltd. ...Appellant
VERSUS
Commissioner of CGST & Central Excise, ...Respondent
Jaipur APPEARANCE:
Shri B.L. Narasimhan with Shri Dhruv Tiwari and Ms. Mehak Mehra, Advocates for the Appellant Shri Rakesh Agarwal with Shri Bhagwat Dayal and Shri Sanjeev Kumar Singh, Authorised Representatives for the Department CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Date of Hearing: 07.05.2025 Date of Decision: 19.08.2025 FINAL ORDER NO. 51189/2025 JUSTICE DILIP GUPTA The order dated 13.10.2021 passed by the Commissioner (Appeals) dismissing the appeal filed by the Khatipura Unit of the National Engineering Industries Ltd.1 to assail the order dated 30.09.2020 passed by the Additional Commissioner has been challenged in this appeal. The Additional Commissioner confirmed the demand of CENVAT credit under section 11A of the Central Excise Act, 19442 and ordered it
1. the appellant
2. the Central Excise Act 2 Excise Appeal No. 51129 of 2022 to be recovered from the appellant with interest. Penalty was also imposed upon the appellant.
2. The Khatipura Unit is engaged in the manufacture of ball bearing and axle box falling under Chapters 84 and 86 of the First Schedule to the Central Excise Tariff Act, 1985 and has both central excise registration as well as service tax registration. Apart from the Khatipura Unit, the appellant has other manufacturing units located at Niwai (Rajasthan), Manesar (Haryana), and Vadodara (Gujarat), which are separately registered with the central excise department. The appellant also has an office at Kolkata having Input Service Distributor3 registration which distributes credit to all the units of the appellant.
3. The department audited the records of the appellant from 29.11.2017 to 11.12.2017 and observed that the ISD office at Kolkata had wrongly distributed the ISD credit by ignoring the turnover of the Vadodara unit which resulted in excess credit to the Khatipura Unit. The department asked the appellant to reverse the excess availment of credit. In response, the appellant reversed the credit in its Form GSTR- 3B returns filed for the month of May 2018 and communicated this fact to the department by a letter dated 12.06.2018. By a letter dated 05.12.2018 the Assistant Commissioner, Vadodara was also informed about the reversal of credit and the fact that the credit so reversed will be availed by the Vadodara unit. As no response was received, the appellant, by a letter dated 09.04.2019, informed the department that it was not required to reverse the transitional credit and that it intended to re-avail the same in Form GSTR-3B.
4. The department, by a letter dated 23.04.2019, directed the appellant not to avail the CENVAT credit and further asked the appellant
3. ISD 3 Excise Appeal No. 51129 of 2022 to provide reasons in case such credit was re-availed. The appellant by a letter dated 27.05.2019, submitted inter alia that CENVAT credit so reversed has been re-availed in its Form GSTR-3B for the month of March 2019 since no communication was received from the Assistant Commissioner, Vadodara and in the absence of any mechanism to suo moto re-distribute the credit, it had correctly availed the CENVAT credit in accordance with the provisions of law.
5. The department issued a show cause notice dated 31.12.2019 to the appellant proposing to demand and recover CENVAT credit of Rs. 94,70,738 under rule 14 of the CENVAT Credit Rules 20044, read with section 11A of the Central Excise Act and section 73 of Chapter V of the Finance Act, 19945 with interest by invoking the extended period of limitation. The show cause notice alleged that the appellant had wrongly availed CENVAT credit in contravention of rule 7 and rule 9(6) of the 2004 Credit Rules.
6. The appellant submitted a reply dated 27.08.2020 pointing out that CENVAT credit was correctly availed by it and that the entire exercise of availing credit by the appellant was revenue neutral and that the extended period of limitation could not have been invoked.
7. The Additional Commissioner, Jaipur by order dated 30.09.2020 confirmed the entire demand of CENVAT credit proposed in the show cause notice with interest and penalty equal to the demand confirmed. The said demand was confirmed on the grounds that the ISD credit had been wrongly distributed by the appellant by ignoring the turnover of the Vadodara Unit in contravention of rule 7 of the 2004 Credit Rules and thus, excess credit had been availed by the Khatipura Unit and that
4. the 2004 Credit Rules
5. the Finance Act 4 Excise Appeal No. 51129 of 2022 the submission of the appellant about revenue neutrality was meaningless as both the units are different. The Additional Commissioner also held that the appellant had not disclosed the details regarding availment of CENVAT credit and as such did not discharge the onus of declaring its liability under the self-assessment regime. The invocation of the extended period of limitation was, therefore, upheld.
8. Feeling aggrieved by the order dated 30.09.2020 passed by the Additional Commissioner, the appellant filed an appeal before the Commissioner (Appeals).
9. The Commissioner (Appeals), by order dated 13.10.2021, dismissed the appeal and upheld the entire demand of CENVAT credit with interest and penalty.
10. This appeal has been filed to assail the aforesaid order passed by the Commissioner (Appeals).
11. Shri B.L. Narasimhan learned counsel for the appellant assisted by Shri Dhruv Tiwari and Ms. Mehak Mehra made the following submissions:
(i) The entire duty demand confirmed is beyond the normal period of two years as the show cause notice was issued on 31.12.2019 proposing demand of CENVAT credit for the period from April 2016 to June 2017. The appellant had no intention to act dishonestly and had always acted in accordance with the statutory provisions and every relevant fact was on record. The appellant did not engage in any suppression or wilful mis-statement with intent to evade payment of duty. All the material facts were known to the Department and were verified by them 5 Excise Appeal No. 51129 of 2022 from time to time. The appellant had been regularly filing its Central Excise returns and its records had been regularly audited by the Department. The onus was on the Department to assert and prove the existence of suppression. It has not been discharged in the present case. Further, when two or more views were possible on a particular issue and the appellant did the self-assessment of availment of CENVAT credit as per its views and understanding.
The appellant could not foresee what view the audit team may take in the future. The extended period of limitation, therefore, could not have been invoked. To support this submission, learned counsel placed reliance on the following decisions:
(a) Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd.6;
(b) Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur7;
(c) Mahanagar Telephone Nigam Ltd. vs. Union of India8;
(d) Union of India vs. Mahanagar Telephone Nigam Ltd9;
(e) M/s. Hero MotoCorp Limited vs. The Commissioner (Appeals), Central Excise and CGST, Jaipur10;
(f) M/s. Vandana Global Ltd. vs. Commissioner (Appeals), Central GST, Central Excise & Customs, Raipur11;
(g) Birla Corporation Ltd. vs. Commissioner of CGST and Central Excise12;
6. 2023 (385) E.L.T. 481 (S.C.)
7. 2013 (288) E.L.T. 161 (S.C.)
8. 2023 (73) G.S.T.L. 310 (Del.)
9. 2024 (388) E.L.T. 141 (S.C.)
10. Excise Appeal No. 51930 of 2019 dated 25.04.2024
11. Excise Appeal No. 53026 of 2018 dated 02.12.2022
12. Excise Appeal No. 50799 of 2021 decided on 23.03.2023 6 Excise Appeal No. 51129 of 2022
(h) Commissioner of CGST and Central Excise, Jabalpur vs. Birla Corporation Ltd.13;
(ii) The department alleged in the show cause notice that if the audit of the appellant had not been conducted, the factum of wrongful availment of CENVAT credit and its utilization thereof would have remained undetected. Merely because the availment of excess CENVAT credit came to the knowledge of the department during audit, cannot be the basis to allege fraud and suppression on the part of the appellant. Thus, there was no justification for the department to invoke the extended period. In support of this submission learned counsel placed reliance on the following decisions:
(a) M/s. G.D. Goenka Private Limited vs. The Commissioner of Central Goods and Services Tax, Delhi South14;
(b) M/s. Continental Engines Ltd. vs. Commissioner, Central Excise & Service Tax, Alwar (Raj.)15.
(iii) The entire dispute pertains to the alleged excess availment of CENVAT credit in contravention of rule 7 of the 2004 Credit Rules and rule 9(6) of the 2004 Credit Rules. When the appellant availed CENVAT credit on the basis of invoices issued by the ISD, the correctness of the distribution of such credit can be determined only by initiating proceedings, if any, at the end of such ISD. The department has no
13. Civil Appeal Diary No. 33334 of 2023 decided on 03.10.2023
14. Service Tax Appeal No. 51787 of 2022 dated 21.08.2023
15. Excise Appeal No. 52700 of 2018 dated 11.07.2023 7 Excise Appeal No. 51129 of 2022 jurisdiction to examine the correctness of distribution of credit by the ISD at the end of the appellant by initiating proceedings against the appellant. In support of this submission, learned counsel placed reliance on the following decisions:
(a) M/s. Bharat Sanchar Nigam Ltd. vs. The Commissioner of Central Excise and 16 Service Tax, Chandigarh-I ;
(b) Commissioner of Central Excise, Chandigarh-I vs. M/s. Brillion Consumer Products Pvt. Ltd.17;
(c) India Cements Ltd. vs. Commissioner of Central Tax, Tirupati-GST18;
(d) Metro Shoes Pvt. Ltd. vs. Commissioner of Central Excise, Mumbai-I19;
(iv) The present proceedings are without jurisdiction for the reason that the alleged wrongly availed CENVAT credit already stood transitioned by the appellant to the GST regime through Form GST-TRAN-1 and was re-availed as GST ITC only in Form GSTR-3B. In such a case, the proceedings initiated under the 2004 Credit Rules are without jurisdiction; and
(v) There is no dispute as to eligibility of the appellant to avail CENVAT credit. The dispute merely pertains to the manner of distribution of CENVAT credit and consequent availment thereof by the appellant. Both are units of the appellant, which are entitled to take the CENVAT credit. Thus, when the appellant availed excess credit attributable to Vadodara unit, it is a
16. Service Tax Appeal No. 50714 of 2015 dated 12.01.2024
17. Excise Appeal No. 1528 of 2012 dated 27.09.2024
18. (2023) 7 Centax 94 (Tri.-Hyd.)
19. Excise Appeal No. 1081 of 2008 dated 13.09.2019 8 Excise Appeal No. 51129 of 2022 case of revenue neutrality as no loss of revenue is caused to the Government.
12. Shri Rakesh Agarwal, Shri Bhagwat Dayal and Shri Sanjeev Kumar Singh, learned authorised representatives appearing for the department, however, supported the impugned order and made the following submissions:
(i) Being manufacturer, the appellant was under a statutory obligation to establish that credit transferred was admissible to it. The appellant unit at Jaipur was eligible of the credit pertaining to their unit but it availed excess credit, which was the share of the unit at Vadodara;
(ii) Having availed inadmissible credit, the statue provides that where the CENVAT credit has been taken wrongly, the same shall be recovered from the manufacturer under section 11A of the Central Excise Act or section 73 of the Finance Act. Therefore, notice for recovery was issued to the appellant for availing wrong credit in terms of rule 14 of Credit Rules; and
(iii) There is no specific column for declaration of credit availed from ISD in the ER-1 return. In such a case, an onerous responsibility is cast on the assessee to correctly state the facts. The burden to prove admissibility of credit is upon an assessee.
Clarification, consultation or consultation with departmental officers could have been undertaken. Having failed to discharge their statutory obligation, 9 Excise Appeal No. 51129 of 2022 it can be said that the appellant suppressed facts with intention to avoid duty liability; and
(iv) The extended period of limitation was correctly invoked in the facts and circumstances of the case.
13. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
14. The first and foremost issue that arise and consideration in this appeal is as to whether the extended period of limitation was correctly invoked in the present case because if this issue is decided in favour of the appellant it would not be necessary to examine the other issues on merits that have been raised by the appellant. It is for this reason that the learned counsel for the appellant and the learned authorized representative were heard only on this issue.
15. The period involved in this appeal is from April 2016 to June 2017 and the show cause notice was issued on 31.12.2019. The entire period is covered by the extended period of limitation contemplated under section 11A(4) of the Central Excise Act.
16. Sections 11A(1) and 11A (4) of the Central Excise Act, as they stood at the relevant time, which deal with issuance of notices for recovery of duties not paid or levied are reproduced below:
―SECTION 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.--
(1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the 10 Excise Appeal No. 51129 of 2022 provisions of this Act or of the rules made thereunder with intent to evade payment of duty,--
(a) the Central Excise Officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;
(b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of,--
(i) his own ascertainment of such duty; or
(ii) duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA.
(2) ***** (3) ***** (4) Where any duty of excise has not been levied or paid or has been short levied or short-paid or erroneously refunded, by the reason of -
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice‖.11
Excise Appeal No. 51129 of 2022
17. It would be seen from a perusal of sub-section (4) of section 11A of the Central Excise Act that where any excise duty has not been levied or paid, the Central Excise Officer may, within two years from the relevant date, serve a notice to the person chargeable with the duty requiring him to show cause why he should not pay the amount specify in the notice. Sub-section (4) of section 11A, however, provides that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, by reason for fraud; or collusion; or any wilful mis-statement; or suppression facts; or contravention of any of the provisions of the Act or Rules made thereunder with intent to evade payment of duty, the Central Excise Officer shall, within five years from the relevant date service notice on such person requiring into show cause why he should not pay the amount specified in notice with interest and penalty.
18. It is clear that to invoke the extended period of limitation, there has to be, amongst others, suppression of facts. Even assuming that there is suppression, it is necessary that such suppression is wilful and with an intent to evade payment of central excise duty. This is what the Supreme Court and the Delhi High Court have held.
19. In Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay20, the Supreme Court examined whether the department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Central Excise Act. The proviso to section 11A of the Central Excise Act which was considered by the Supreme Court carved out an exception to the provisions that permitted the department to reopen proceedings if the levy was short within six months of the
20. 1995 (78) E.L.T. 401 (SC) 12 Excise Appeal No. 51129 of 2022 relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since ―suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The observations of the Supreme Court are as follows:
―4. Section 11A empowers the Department to re- open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.‖ (emphasis supplied) 13 Excise Appeal No. 51129 of 2022
20. To examine this issue relating to the extended period of limitation, it would be pertinent to refer to the show cause notice and the findings recorded by the Commissioner (Appeals).
21. The show cause notice invokes the extended period of limitation and the relevant paragraph is reproduced below:
―7. The assessee had contravened the provisions of CENVAT Credit Rules, 2004 by suppressing the facts with an intent to avail and utilize CENVAT credit wrongly. Had the AG Audit of the assessee not been conducted, the above fact of their wrong availment and utilization of Cenvat Credit would have remained undetected.
In view of the above wrongly availed & utilized Cenvat Credit to the tune of Rs. 94,70,738/- appears recoverable in terms of Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 and Section 73 of the Finance Act, 1994 from the assessee. The assessee also appear liable to pay interest on the amount of Rs. 94,70,738/- in terms of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 and Section 75 of the Finance Act, 1994. They also appear liable for penalty in terms of Rule 15 of Cenvat Credit Rules, 2004 readwith Section 11AC of the Central Excise Act, 1944 and Section 78 of the Finance Act, 1994 and,‖ (emphasis supplied)
22. The Commissioner (Appeals) recorded the following findings on the invocation of the extended period of limitation:-
―7. As regards imposition of penalty, I find that after introduction of self-assessment system and increasing liberalization in laws and procedures, under the taxation regime, overall responsibility for availment of CENVAT Credit, assessment, classification, valuation and duty/tax payable in respect of excisable goods had been casted upon the Assessee. Thus, it was the responsibility of the appellant to comply with the provisions of Law. Further, the appellant has failed to 14 Excise Appeal No. 51129 of 2022 produce any evidence which proves that they intimated the department before availing credit under dispute. I find that there is no such provision or law which debars the department from issuing show cause notice(s) by invoking extended period where the assessee did not disclose the correct information to the department. No law would encourage any assessee to adopt such measures to avoid show cause notice by showing disregard to the legal provisions. Therefore, I find that the appellant has violated the provisions of the CENVAT Credit Rules, 2004 and the department is very much correct in applying clause of extended period for recovery of government dues. And, also the appellant cannot escape from the provisions of equal penalty under Rule 15 of the CENVAT Credit Rules, 2004 as the case may be.‖ (emphases supplied)
23. It is not in dispute that the appellant has been regularly filing the central excise returns and its record had also been audited by the department from time to time. The appellant believed that it could legally reverse the credit in Form GSTR-3B returns. The appellant could not foresee what view the audit team may ultimately take in the future. Thus, when two or more views were possible on a particular issue then merely because the appellant took one view would not mean that the appellant had suppressed any facts from the department with an intention to evade payment of duty. It was for the department to not only allege that the appellant had suppressed material facts from the department to evade payment of duty, but also prove it. A mere statement in the show cause notice that the appellant suppressed material facts with an intent to evade payment of duty does not suffice. This apart, merely because facts came to the notice of the department when the audit was conducted would not by itself be sufficient for invocation of the extended period of limitation. Nothing prevented the 15 Excise Appeal No. 51129 of 2022 officers of the department from scrutinizing the returns filed by the assessee. It also needs to be noted that it is not the case of the department that the appellant had avoided giving any particulars required to be mentioned in the returns or that it had mis-stated certain facts in the returns. The order mentions that a burden is cast upon the appellant to correctly state facts in the era of self-assessment. As noted above, the officers of the department could have scrutinized the returns filed by the appellant and sought information from the appellant in case there was any doubt. The conditions set out in section 11A (4) of the Central Excise Act for invoking the extended period of limitation had to be scrupulously followed by the department.
24. In this connection it will be useful to refer to a decision of the Tribunal in G.D. Goenka and the relevant portions are reproduced below:
―14. In this appeal, the case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment and, during the adjudication proceedings and is before us that it is entitled to the CENVAT credit. Thus, we find that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Naturally, the appellant self-assessed duty and paid service tax as per its view. Such a self-assessment, cannot, by any stretch of imagination, be termed deliberate and wilful suppression of facts.
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16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it 16 Excise Appeal No. 51129 of 2022 amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self-assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment.
17. The argument that the appellant had not disclosed in its returns that it was availing and using ineligible CENVAT credit also deserves to be rejected. The appellant cannot be faulted for not disclosing anything which it is not required to disclose. Form ST-3 in which the appellant is required to file the returns does not require details of the invoices or inputs or input services on which it availed CENVAT credit and the appellant is not required to and hence did not provide the details of the CENVAT Credit taken. It also needs to be pointed out that the Returns are filed online and therefore, it is also not possible to provide any details which are not part of the returns. If the format of ST-3 Returns is deficient in design and does not seek the details which the assessing officers may require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self assessment, its obligation is discharged.
18. Another ground for invoking extended period of limitation is that the appellant had not sought any clarification from the department. We find that there is neither any provision in the law nor any obligation on the assessee to seek any clarification. It was held by the High Court of Delhi in paragraph 32 of Mahanagar Telephone Nigam Ltd. vs. Union of India & Ors.
[2023-TIOL-407-DELHI HIGH COURT] as follows: 17
Excise Appeal No. 51129 of 2022 ―32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious.‖ Therefore, there is no force in this ground also.
19. It has also been pointed out that but for the audit, the allegedly irregularly availed CENVAT credit would not have come to light. It is incorrect to say that but for the audit, the alleged irregular availment of CENVAT credit would not have come to light. It is undisputed that the appellant has been self-assessing service tax and filing ST-3 Returns.
Unlike the officers, the assessee is not an expert in taxation and can only be expected to pay service tax and file returns as per its understanding of the law. The remedy against any potential wrong assessment of service tax by the assessee is the scrutiny of the Return and best judgment assessment by the Central Excise Officer under section 72.
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20. Thus, ‗the central excise officer' has an obligation to make his best judgment if either the assessee fails to furnish the return or, having filed the return, fails to assess tax in accordance with the Act and Rules. To determine if the assessee had failed to correctly assess the service tax, the central excise officer has to scrutinize the returns. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on 18 Excise Appeal No. 51129 of 2022 the central excise officer, i.e., the officer with whom the Returns are filed. For this purpose, the officer may require the assessee to produce accounts, documents and other evidence he may deem necessary. Thus, in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72.
21. This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self- assessment was clarified by the Central Board of Excise and Customs [CBEC] in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows:
1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in his report on Indirect Taxation (Report of the Task Force on Indirect Taxation 2002, Central Board of Excise and Service Tax, Government of India.). The observation made in the context of Central Excise but also found to be relevant to Service Tax is reproduced below:
It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment.
No doubt, audit and anti-evasion have their roles to play, but assessment or 19 Excise Appeal No. 51129 of 2022 confirmation of assessment should remain the primary responsibility of the Central Excise Officers.
(emphasis supplied)
22. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is neither legally correct nor is it consistent with the CBEC's own instructions to its officers.‖ (emphasis supplied)
25. The aforesaid decision of the Tribunal in G.D. Goenka clearly holds that even during the period of self-assessment, the extended period of limitation cannot be automatically invoked in a case whether there is a difference of opinion between the assessee and the department. The decision holds that to invoke the extended period of limitation, the necessary elements contemplated under the section 11A(4) of the Central Excise Act must be established. It has also been held that so long as the assessee submitted the returns as per its assessment in the format provided by the department, the obligation is discharged and merely because the department may have a different view would not mean that the extended period of limitation can be extended. The decision also rejects the contention of the department that the extended period of limitation could be invoked since it was during an audit that certain facts came to the notice of the department. Even in such a situation, the Tribunal held that when the assessee had been filing returns, the responsibility of taking action, if the assessee is not correct, rests upon the central excise officers before whom the return is to be filed.
26. In this view of the matter, it is not possible to sustain the findings recorded by the Commissioner (Appeals) that the extended period of limitation was correctly invoked in the facts and circumstances of the 20 Excise Appeal No. 51129 of 2022 case. As the entire demand that has been confirmed falls within the extended period of limitation, the demand would have to be set aside as the extended period of limitation could not have been invoked in the facts and circumstance of the case.
27. It would, therefore, not be necessary to deal with the contentions advanced by the learned counsel for the appellant on the merits of the case.
28. The impugned order dated 13.10.2021 passed by the Commissioner (Appeals) is, accordingly, set aside and the appeal is allowed with consequential benefit(s), if any.
(Order pronounced on 19.08.2025) (JUSTICE DILIP GUPTA) PRESIDENT (P. ANJANI KUMAR) MEMBER (TECHNICAL) Jyoti 21 Excise Appeal No. 51129 of 2022 CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH - COURT NO. I EXCISE APPEAL NO. 51129 OF 2022 National Engineering Industries Ltd. ...Appellant VERSUS Commissioner of CGST & Central Excise, ...Respondent Jaipur APPEARANCE:
Shri B.L. Narasimhan with Shri Dhruv Tiwari and Ms. Mehak Mehra, Advocates for the Appellant Shri Rakesh Agarwal with Shri Bhagwat Dayal and Shri Sanjeev Kumar Singh, Authorised Representatives for the Department CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 07.05.2025 Order Pronounced on 19.08.2025.
(JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Jyoti