Whether non furnishing of information that is not prescribed to be given amounts to suppression?

PJ/Case Law/2013-14/1851

Case:-C.C.E., KOLKATA-VI Vs M/s ITC LTD

Citation:-2013-TIOL-1135-CESTAT-KOL

Brief Facts:- The respondent had availed cenvat credit on various input services during the material period 2004-2005 and 2006-2007. A show-cause notice was issued invoking extended period of limitation alleging that they had availed inadmissible Cenvat Credit and Education Cess and the same were liable to be recovered from them. The adjudicating authority confirmed the demand and imposed equivalent penalty under Section 11AC of the Central Excise Act, 1944. Aggrieved, the Respondent had filed appeal before Commissioner (Appeals). The Commissioner (Appeals) has allowed their appeal on the ground of limitation. Hence, Revenue preferred an appeal before Tribunal.

Appellant’s Contention:- The Revenue has submitted that the respondent had availed cenvat credit wrongly on various input service, the details of such input services were not disclosed by them in their monthly ER-1 Returns filed with the department. The Revenue also submit that non-disclosure of details of such input services in their returns would amount to suppression of facts and accordingly, extended period of limitation has been rightly invoked and confirmed by the adjudicating authority. In support, he has relied upon the judgement of the Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Surat I Vs. Neminath Fabrics Pvt. Ltd. reported in 2010 (256) ELT 369 (Guj.) = (2011-TIOL-10-HC-AHM-CX)and the judgement of the Tribunal in the case of Commr. of Central Excise, Haldia Vs. Ganga Electrocast Ltd. reported in 2011 (271) ELT 288 (Tri.-Kolkata).

Respondent’s Contention:- The Respondent has submitted that the total amount of cenvat credit availed on all the inputs & input services were duly disclosed by them in their monthly ER-1 Returns. The respondent further submit that since there has been no column in the monthly ER-1 Returns earmarked, under which the we were required to disclose the description and details of Inputs & Input services, on which CENVAT credit was availed by them, the respondent did not furnish the details of such input services. It is his contention that in absence of a statutory obligation to disclose the details of input services on which CENVAT Credit had been availed, the respondents cannot be charged with suppression of facts or willful mis-statement with intent to evade payment of duty. In support of his contention, the respondent has referred to the judgement of the Tribunal in the case of Commr. of Central Excise, Jaipur I Vs. Pushp Enterprises reported in 2011 (22) STR 299 (Tri.-Del.) = (2011-TIOL-297-CESTAT-DEL), Commissioner of Central Excise, Indore Vs. Medicaps Ltd. reported in 2011 (24) STR 572 (Tri.-Del.) = (2011-TIOL-1993-CESTAT-DEL).

The respondent distinguishing the judgment in Neminath Fabrics Pvt. Ltd. case (cited supra) referred to by the revenue has submitted that the issue involved in the said case was for computation of the period of one year or five years from the date of detection of fraud, collusion etc. as prescribed under Section 11A(1) of CEA, 1944. The principle of law laid down by the Hon'ble Gujarat High Court in the said case is not applicable to the present circumstances as in that case the Hon'ble High Court was confronted with the question whether show-cause notice was to be issued within a period of one year from the date of knowledge of suppression of facts etc. or to be issued within five years from the relevant date specified in sub-section (3) of Section 11A of the said Act. In that context, the Hon'ble High Court has held that the concept of date of knowledge cannot be imported into the proviso to Section 11A (1) of the Central Excise Act, 1944. The contention is that the Tribunal in the case of Ganga Electrocast Ltd. (cited supra), has simply followed the said principle and the facts involved in that case also are different from the present one.

Reasoning of Judgement:- The Tribunal heard both sides and perused the records and finds that the limited issue involved in the present case for determination is, whether the demand for recovery of cenvat credit availed on inadmissible input services, is barred by limitation or otherwise. It is the case of the Revenue that the respondent had not disclosed the details of the input services in their monthly returns, resulting into suppression of facts and hence, extended period of limitation is applicable to the facts of the present case. The Tribunal further finds that the Commissioner (Appeals) had observed that since the respondent had been filing ER-1 returns regularly indicating the total amount of credit availed by them and nothing prevented the Department from calling for details of the said input services on which credit was availed and the respondents were under a bonafide belief that the credit of service tax paid by the service provider on the said input services were available to them as credit, no suppression on the part of the respondent could be sustained. In Tribunal’s opinion, the said reasoning is sound and in consonance with the principle of law laid by this Tribunal. The Tribunal also finds that this Tribunal in similar circumstances, in the case of Commr. of Central Excise, Jaipur I Vs. Pushp Enterprises (cited supra), had observed as under :

"10. In these cases, there is no dispute about the fact that the ER-1 Returns had disclosed the availment of Cenvat Credit but since there is no requirement for enclosing the invoices or giving the details of such credit or neither such details were given nor the invoices were enclosed. However, once ER-I Return is filed, even though it is filed under self-assessment system, the officers are supposed to scrutinize the same. Just because the respondent had taken Cenvat credit in respect of certain input services, which according to the Department was not admissible to them, it cannot be concluded that the credit had been taken knowing very well that the same was not admissible, unless there is some evidence in this regard. Moreover when the quantum of service tax credit availed had been disclosed, the officers were always free to inquire from the respondent about details of the same and satisfy themselves about its correctness. In view of these circumstances, I am of the view that there is no infirmity in the impugned order. Revenue's appeal is dismissed."

The Tribunal also considered that more or less similar view has been expressed by the Division Bench of this Tribunal in the case of Commissioner of Central Excise, Indore Vs. Medicaps Ltd. (cited supra), which reads as under :

"4.We find no merits in the above contention of the revenue. Admittedly the credit availed by the assessee was reflected in the monthly returns. If there is no column in the monthly return to show the nature of service on which the credit was availed, the assessee cannot be blamed for not disclosing the said fact. For invoking the longer period of limitation, there has to be a suppression or misstatement with an intent to evade payment of duty. When the respondents have reflected the amount of credit availed by them in their monthly returns, it cannot be said that there was any positive act of suppression on mis-statement on their part. As such, we are of the view that Commissioner (Appeals) has rightly held a part of the demands as barred by limitation."

The Tribunal agreed with the submissions of the respondent that the principle of law laid down in the case of Neminath Fabrics Pvt. Ltd. (cited supra), relates to computation of time limit of one year or five years prescribed under the provisions of Section 11A (1) of CEA, 1944 after detection of suppression of facts, misstatement etc. while issuing Show Cause Notice for recovery of duty. In that case, suppression has been admitted and it has been held that once suppression is admitted or established, the normal period of one year prescribed under Section 11A(1) for recovery of duty be substituted with five years irrespective of the date of knowledge of such suppression. But, in the present case, the respondent had availed cenvat credit on various input services on the bonafide belief that the same are admissible to them under the definition of inputs services contained in Rule 2(l) of Cenvat Credit Rules, 2004 and declared the quantum of cenvat credit in the ER 1 Returns. The respondent disputed the allegation of suppression and the same is neither admitted nor established. Hence, the principle of law laid down in Neminath Fabrics Pvt. Ltd. case (supra), is not applicable to the facts of the present case.

In view of the above, Tribunal has not found any infirmity in the order passed by the ld. Commissioner (Appeals) accordingly, the same is upheld.

Decision:- Revenue’s appeal dismissed.

Comment:- The crux of this case is that the allegation of suppression is not tenable in the case when the amount of credit taken has been disclosed in the returns filed as if there was any doubt as regards availment of such credit, the revenue was free to inquire about the same. When there is no legal requirement to show the details regarding the nature of input services on which credit has been availed, the allegation of suppression of facts so as to invoke larger period of limitation does not has force.

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PJ/Case Law/2013-14/1851

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