The New Delhi bench of Customs, Excise and Service Tax Appellate Tribunal recently ruled that the extended period of limitation cannot be invoked since the fact of availment of cenvat credit was within the knowledge of the department.
The appellant, M/s. Rieter Automative India Pvt Ltd, a company entered to an agreement with one of the principal manufacturer to whom he has agreed to supply various parts, was aggrieved by the order of the Commissioner of Central Excise wherein cenvat credit taken suo moto by the appellant has been denied by the authorities.
For manufacturing those parts, the appellant company required to purchase certain tools and cost on such purchase were to be refunded from the manufacturer except the amount of duty.
The amount of duty was considered as cenvat credit subsequently some dispute arose between the appellant and principal manufacturer.
Cenvat Credit is a scheme where the manufacturers or the output service providers are allowed a set off of the taxes paid on the inputs or the input services that are used while manufacturing the final products or providing the output service.
On the basis of verbal agreement principal manufacturer bought the tools from appellant and they issued invoice against such purchases. Neither the goods were removed under the said invoice nor was any payment received as a result appellant took suo moto credit and availment of cenvat credit was intimated to the department.
Thereafter, a show cause notice was issued to the appellant alleging that the appellant is not entitled to take suo moto credit by invoking extended period of limitation.
While hearing both the parties’ contention judicial member Ashok Jindal hold that the Show cause notice is barred by limitation. The bench also declared that extended period of limitation cannot be invoked since availment of cenvat credit was well within the knowledge of department.