Extended Period of Limitation can’t be invoked in absence of Suppression of Fact or Fraud: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) of Bangalore Bench has held that the extended period of limitation can’t be invoked in absence of suppression of fact or fraud.

Mangalore Refinery and Petrochemicals Ltd, the appellant is an oil refinery and subsidiary of Oil and Natural Gas Corporation (ONGC), the Public Sector Undertaking of the Government of India. The appellant’s books of accounts were audited by the Assistant Commissioner and raised an Audit objection regarding the wrong availment of credit of Rs.30,88,313/- on input services by the appellant on said period.

During the course of the investigation, the appellant reversed the credit availed against the disputed invoice to the extent of Rs.19,58,960/- in April-May 2015. However, a Show Cause Notice dated 27.04.2016 was issued to the appellant by invoking the extended period of limitation proposing to disallow and recover credit amounting to Rs.30,88,313/- in terms of Rule 14 of CENVAT Credit Rules, 2004.

The appellant while submitting the reply to the Show Cause Notice raised preliminary objections regarding limitation and submitted that the entire demand has been time-barred since it is raised under Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A(4) of the Central Excise Act, 1944.

Further submitted that since there is no allegation of fraud, collusion, wilful misstatement and suppression of fact etc., invoking provisions of Section 11A(4) of the Act for an extended period of limitation is not applicable.

The Adjudicating Authority itself upheld the objection made by the appellant regarding invoking the extended period of limitation and considering the same, dropped the proposal for a penalty.  It was found that the preliminary objection raised by the appellant from the very beginning of the proceedings is regarding invoking an extended period of limitation despite repeated proceedings before adjudication and Appellate Authorities.

In the case of CCE Indore Vs NEPA Limited, Tribunal held that the assessee being a Public Sector Undertaking, there can be no mala fide intention to avail irregular and non-available CENVAT credit and non-payment of duty with intent to evade payment of duty and held that lower period of limitation and imposition of penalty is not imposable. A Coram comprising of Mr P A. Augustian, Judicial Member observed that once there is no averment either in the SCN or impugned orders regarding the availment of benefits by suppression of fact or fraud, invoking an extended period of limitation is not proper. In light of precedents, the Tribunal allowed the appeal.

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