The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has clarified that an extended period of limitation for demanding duty cannot be invoked when the taxpayer has regularly disclosed the relevant facts, such as availing of an exemption notification, in its statutory returns (ER-1 returns) filed with the department. Such disclosure means the facts were within the knowledge of the Revenue, precluding allegations of suppression required to invoke the extended period.
The Tribunal ruled that a notification that introduces new procedural requirements, such as Notification No. 8/2014-Central Ex. (NT), is applicable only prospectively from its effective date. It cannot be applied retrospectively to transactions that occurred before its implementation to deny benefits like CENVAT credit. Accordingly, the CESTAT dropped the demand of Rs. 3.24 Crores and upheld the eligibility of CENVAT credit.
As far as the duty demand for alleged clandestine removal is concerned, the Division Bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that the demand was raised for the period of January 2013 to January 2014, while the Show Cause Notice was issued on December 27, 2017, by invoking the extended period of limitation.
The Bench found that the appellant had been regularly filing its ER-1 returns, where it explicitly claimed the benefit of the exemption under Notification No. 67/1995-CE. It noted that since the fact of availing this exemption was already in the knowledge of the Revenue through these returns, the extended period of limitation could not be invoked. As the entire demand was based on invoking the extended period, the Tribunal held that the demand fails on the grounds of limitation.
As far as the denial of CENVAT Credit of Rs. 20.33 Crores is concerned, the Revenue’s appeal sought to deny the CENVAT credit based on Notification No. 8/2014-Central Ex. (NT) dated February 28, 2014, which required a supplier of goods to obtain a separate registration as an importer to issue cenvatable invoices. The Tribunal observed that this notification came into effect only from April 1, 2014. Since the entire demand for the CENVAT credit pertained to a period before this date, the notification could not be applied retrospectively.
Briefly, the appellant, a manufacturer of excisable goods, entered into an agreement with M/s. Stemcor India Pvt Ltd. (Stemcor) on April 24, 2012, as per which, JSL was to convert coal, imported and owned by Stemcor, into coke on a job work basis at its coke oven facility. The finished coke was then cleared to Stemcor’s customers. JSL charged excise duty on these clearances and also availed CENVAT credit on the CVD paid by Stemcor for the coal import, based on invoices issued by Stemcor.
A portion of the coke produced was captively consumed by JSL in its own plant for manufacturing other excisable goods, for which it claimed an exemption under Notification No. 67/1995-CE. For this quantity, Stemcor issued commercial invoices to JSL, charging VAT and Entry Tax. Following an audit for the period 2012-13 to 2014-15, a Show Cause Notice dated December 27, 2017, was issued to JSL, invoking an extended period of limitation.
The notice proposed two demands, i.e., a duty of Rs. 3.24 Crores on the alleged clandestine removal of 30,833.76 MT of coke that was captively consumed by JSL, and the denial of the CENVAT credit amounting to Rs. 20.33 Crores, which was availed by JSL based on invoices from Stemcor. The Principal Commissioner confirmed the first demand regarding clandestine removal but dropped the second demand concerning the CENVAT credit.
Appearances:
Advocate Rahul Dhanuka, for the Appellant/ Taxpayer
AR, P. Das, for the Respondent/ Revenue
