Detection of Contravention during Audit is insufficient justification for invoking extended period of Limitation: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench held that detection of contravention during audit is insufficient justification for invoking extended period of limitation.

The appellant, M/s. Emami Paper Mills Limited is engaged in the manufacture and sale of writing paper and printing paper, newsprint, etc. falling under Chapter 48 of the First Schedule to the Central Excise Tariff Act, 1985. For manufacture of the said final products the appellant procured inputs and availed Cenvat Credit of Central Excise duty as well as Education Cess (E Cess) and Secondary and Higher and Education Cess (SHE Cess). The Cenvat Credit so availed was utilized by the appellant in due course.

Show cause notice was issued, proposing recovery of Cenvat Credit under Rule 14 of the Rules read with the proviso to Section 11A(1) of the Central Excise Act, 1944, for illegal utilization of basic Excise Duty credit towards payment of E Cess and SHE Cess. The said show cause notice also proposed imposition of interest and equivalent penalty.

The Adjudicating Authority confirmed the demand hence the present appeal has been preferred.

After hearing he argument from both sides the Bench consisting of P K Choudhary, Judicial Member held that “I agree with the submissions of the Counsel for the appellant that the revenue’s case could not have been improved during adjudication and a mere statement in the order that the appellant had suppressed material facts from the Department and that the purported contravention had been detected only during audit was insufficient justification for invoking the extended period of limitation. “

“Thus, there being no clear and explicit allegation against the appellant in the show cause notice with regard to suppression of facts or fraud or wilful mis-representation or intentional evasion of duty, it automatically follows that the purported show cause proceedings against the appellant were barred by limitation.”

To Read the full text of the Order CLICK HERE

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