Relief for Bridgestone India: CESTAT Sets Aside ₹96 Lakh Excise Demand for Alleged Excess CENVAT Credit [Read Order]

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at New Delhi, has set aside a demand of central excise duty amounting to over ₹96 lakh, finding the extended period of limitation to be wrongly invoked.

The appeal was filed by Bridgestone India Private Limited, challenging an order passed by the Commissioner (Appeals), which had upheld the confirmation of excise duty demand for the period from April 2017 to June 2017 along with interest and penalty. The demand arose following an audit objection alleging excess availment of CENVAT credit distributed by the Input Service Distributor in violation of Rule 7 of the CENVAT Credit Rules, 2004.

A show cause notice was issued in January 2022 invoking the extended period of limitation under Section 11A(4) of the CentralExcise Act, 1944 on the ground that the alleged irregularity came to light only during departmental audit and would otherwise have remained unnoticed.

The adjudicating authority confirmed the demand, and held that the material facts were suppressed. The same view was adopted by the Commissioner (Appeals).

Before the tribunal, the appellant contended that all necessary disclosures had been made in the statutory ER-1 returns and that there was no wilful suppression or intent to evade duty. It was argued that the mere fact that the issue was detected during audit could not justify invocation of the extended period of limitation.

The bench, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member), examined the scope of Section 11A(4) of the Central Excise Act and reiterated that suppression of facts must be wilful and accompanied by an intent to evade payment of duty.

Relying on settled judicial principles, including the Supreme Court’s ruling in Pushpam Pharmaceutical Co., the tribunal observed that suppression cannot be inferred merely because detailed information was not specifically called for or because the department detected the issue at a later stage through audit.

The tribunal noted that the show cause notice did not establish deliberate suppression or misstatement with intent to evade duty, which is a mandatory precondition for invoking the extended period.

Accordingly, the tribunal held that the demand was time-barred and unsustainable in law. The impugned order passed by the Commissioner (Appeals) was set aside, and the appeal was allowed in favour of the assessee.

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