CESTAT quashes SCN after the lapse of more than two years alleging Suppression of Facts with intent to evade Payment of Excise Duty [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench has quashed the Show Cause Notice after the lapse of more than two years alleging suppression of facts with intent to evade payment of Excise duty.

The Appellant, M/s. Heavy Vehicles Factory are engaged in the manufacture of battle tanks, armoured fighting vehicles, etc., and are availing exemption contained in Notification No. 62/1995-CE dated 16.03.1995. On rescinding of the said Notification, the appellant obtained Central Excise Registration with effect from 01.06.2015 and have availed Cenvat Credit of Rs. 34,72,54,650/- paid on inputs in stock, work in progress and finished goods. A Show Cause Notice was issued and was followed by an Order-in-Original No. 7/2021 dated 27.02.2021, holding that the credit, availed by the appellants, is not admissible to them in terms of proviso to Rule 4 (1) of the Cenvat Credit Rules,2004 (CCR,2004 in short), as the credit can be availed only within one year from the date of invoice. Hence, this appeal.

The appellant contended that an outer time limit for availing the credit was introduced in sub-rule (1) and sub-rule (7) of Rule 4 with effect from 01.09.2014; Rule 3 (2) of CCR, 2004, enables a manufacturer to avail credit in respect of inputs lying in stock and contained in work in progress and in finished goods when the final product ceases to be exempted; this provision has been brought into the statute with the intention that the inputs lying in stock would be used for manufacture of final products that will be cleared on payment of duty.

The coram of Judicial Member, Sulekha Bevi C.S. and Technical Member, P. Anjani Kumar has held that it was not open for the department to issue SCN dated 27.06.2019 after the lapse of more than two years there too alleging suppression of facts with intent to evade payment of duty etc. We find that there is not even an iota of truth in the allegation of the department as per the records of the case. Moreover, looking into the fact that the appellants are a company under the Ministry of Defence intention to evade payment of duty cannot be alleged. We are of the considered opinion that under the facts and circumstances of the case, even any other company could not have been charged with suppression of facts with an intention to evade payment of duty.

“In view of the same, we find that the appellants have though not made out a case on merits of the issue, have certainly made out a strong case in their favour on limitation and succeed on this count,” the CESTAT said.

To Read the full text of the Order CLICK HERE

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