Tribunal finds no justification for extended limitation period, citing full disclosure by assessee and lack of intent to evade duty.
In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai has ruled in favor of M/s Indian Oil Petronas, a joint venture between Indian Oil Corporation Ltd. and Petronas of Malaysia, by setting aside the demand for CENVAT Credit denial. The tribunal found that the extended period of limitation under the Cenvat Credit Rules, 2004, read with Section 11AC of the Central Excise Act, 1994, could not be invoked, as the appellant had disclosed all material facts without any evidence of suppression or intent to evade duty.
The case revolved around the denial of CENVAT Credit on capital goods and input services used in setting up an LPG manufacturing plant. M/s Indian Oil Petronas had entered into a contract with M/s Punj Lloyd for the procurement, erection, installation, and commissioning of the plant. The appellant availed of CENVAT Credit on the capital goods and input services, which was later challenged by the Department on grounds of ineligibility and alleged suppression of facts.
The tribunal, comprising Mr. P. Dinesha and Mr. Vasa Seshagiri Rao, noted that the appellant had consistently disclosed all relevant information in their ER-1 returns and had not suppressed any facts to wrongfully avail of CENVAT Credit. The tribunal drew upon precedents from the Supreme Court, including decisions in "CCE v. Pepsi Foods Ltd." and "Canon India Private Limited v. Commissioner of Customs," to underline the importance of intent in cases of alleged duty evasion.
The tribunal emphasized that the Department was aware of all material facts, as evidenced by their verification of the appellant's accounts and records. Consequently, the tribunal found no basis for the Department's invocation of the extended limitation period, thereby rendering the demand unenforceable.
In its decision, the tribunal also highlighted the absence of any denial regarding the payment of duty or the filing of returns by the appellant, further weakening the Department's case. The tribunal's ruling effectively nullifies the demand and sets aside the consequential interest and penalties imposed on Indian Oil Petronas.
This judgment reinforces the principle that mere procedural lapses without intent to evade duty cannot justify the invocation of an extended limitation period. The ruling provides relief to M/s Indian Oil Petronas and sets a precedent for similar cases where full disclosure has been made by the assessee.
The tribunal's decision underscores the importance of transparency and adherence to procedural norms by both the Department and the assessee, ensuring that demands for duty are grounded in substantial and justifiable claims.
Bottom Line:
Extended period of limitation under Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1994 cannot be invoked in cases where the assessee has disclosed all material facts and there is no evidence of suppression or intent to evade duty.
Statutory provision(s): Cenvat Credit Rules, 2004 Rule 15(2), Central Excise Act, 1944 Section 11A, Section 11AC
