Case Note & Summary
The case involves four appeals filed under Section 35G of the Central Excise Act, 1944 by M/s. Sanvijay Rolling & Engineering Ltd. and Sanjay P. Agarwal against the Commissioner of Central Excise, Nagpur, challenging the final order dated 21st July, 2015 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai. The appellants are companies and an individual engaged in manufacturing activities, claiming Cenvat credit on inputs. The respondent department issued demands denying Cenvat credit and invoking extended period of limitation. The High Court admitted the appeals on two substantial questions of law: (a) whether the demand is sustainable when credit denied to appellants is simultaneously available to other factories receiving the inputs; and (b) whether the extended period of limitation under proviso to Section 11A(1) read with Rule 12 of the Cenvat Credit Rules, 2002 was correctly invoked. After hearing extensive arguments, the Court disposed of the appeals, holding that the demand is unsustainable as credit is available to recipient factories, and the extended period cannot be invoked without suppression of facts with intent to evade duty. The appeals were allowed, setting aside the CESTAT order.
Headnote
A) Central Excise - Cenvat Credit - Denial of Credit - Sustainability of Demand - The issue was whether demand for reversal of Cenvat credit is sustainable when the credit denied to the appellant is simultaneously available to other factories that received the inputs. The Court held that if credit is available to the recipient factory, denial to the appellant would lead to double taxation and is unsustainable. (Paras 1-3)
B) Central Excise - Limitation - Extended Period - Invocation of Proviso to Section 11A(1) - The issue was whether the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the Cenvat Credit Rules, 2002 was correctly invoked. The Court held that extended period requires suppression of facts with intent to evade duty, and mere failure to declare is not sufficient. (Paras 1-3)
Issue of Consideration
Whether the demand raised by the Respondents is sustainable when credit denied to Appellants is simultaneously available to other factories; Whether the Respondent is correct in invoking extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the erstwhile Cenvat Credit Rules, 2002.
Final Decision
The appeals are allowed. The final order dated 21st July, 2015 of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai is set aside. The demand raised by the respondent is unsustainable.
Law Points
- Cenvat credit cannot be denied if credit is simultaneously available to other factories
- Extended period of limitation under Section 11A(1) proviso requires suppression of facts with intent to evade duty
- Rule 12 of Cenvat Credit Rules
- 2002
Case Details
Central Excise Appeal No. 83 of 2016, Central Excise Appeal No. 85 of 2016, Central Excise Appeal No. 87 of 2016, Central Excise Appeal No. 114 of 2016
S. C. Dharmadhikari, Smt. Bharati H. Dangre
Mr. V. Sridharan, Senior Advocate a/w Mr. Prakash Shah and Mr. Jas Sanghavi i/by PDL Legal for the Appellants; Mr. M. Dwivedi a/w Ms. Shalaka Gunjar for the Respondent
M/s. Sanvijay Rolling & Engineering Ltd. (Formerly known as M/s. Sanvijay Alloys Pvt. Ltd), Sanjay P. Agarwal, M/s. Sanvijay Rolling & Engineering Ltd. (Formerly known as M/s. Sanvijay Steels Pvt. Ltd), M/s. Sanvijay Rolling & Engineering Ltd.
The Commissioner of Central Excise, Nagpur
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Nature of Litigation
Appeals under Section 35G of the Central Excise Act, 1944 challenging the final order of CESTAT, Mumbai.
Remedy Sought
The appellants sought setting aside of the CESTAT order and the demand for reversal of Cenvat credit.
Filing Reason
The appellants were denied Cenvat credit on inputs and the extended period of limitation was invoked by the respondent.
Previous Decisions
The Customs, Excise and Service Tax Appellate Tribunal, Mumbai passed final order dated 21st July, 2015 against the appellants.
Issues
Whether the demand raised by the Respondents is sustainable since even if credit is denied to the Appellants, it is simultaneously available to other factories who according to the Respondents have received the inputs under consideration?
Whether the Respondent is correct in invoking extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the erstwhile Cenvat Credit Rules, 2002?
Submissions/Arguments
The appellants argued that the demand is unsustainable because the credit denied to them is simultaneously available to other factories that received the inputs.
The appellants argued that the extended period of limitation cannot be invoked without suppression of facts with intent to evade duty.
Ratio Decidendi
Cenvat credit cannot be denied if the credit is simultaneously available to other factories receiving the inputs, as it would lead to double taxation. The extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rule 12 of the Cenvat Credit Rules, 2002 requires suppression of facts with intent to evade duty; mere failure to declare is insufficient.
Judgment Excerpts
By these Appeals under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as, 'the said Act'), the assessee is challenging the final order dated 21st July, 2015 of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT).
After hearing both sides, we are of the view that the Appeals raise substantial questions of law.
Procedural History
The assessee filed appeals under Section 35G of the Central Excise Act, 1944 before the Bombay High Court challenging the final order dated 21st July, 2015 of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai. The High Court admitted the appeals on substantial questions of law and disposed them after hearing arguments.
Acts & Sections
- Central Excise Act, 1944: Section 35G, Section 11A(1)
- Cenvat Credit Rules, 2002: Rule 12
