Dorma India Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that cenvat credit availed on trading activity is not admissible, accordingly, cenvat credit admissible on common input services needs to be reversed by invoking the extended period of limitation.
Facts-
The appellant is engaged in manufacture of “Automatic Door Operators and Door Closures” and parts falling under Chapter Sub-heading 83 of CETA, 1985. The appellant was also engaged in trading activity of imported as well as locally procured components and inputs.
After investigation, it was found that the appellant availed and utilized credit of common input services used for trading as well as for manufacturing activity which is ineligible as trading activity is neither a service nor activity of manufacture. Appellants had not maintained separate accounts for the common input service used for manufacturing activity and trading activity and had not reversed the proportionate credit availed for trading activity. In view of the above, Show Cause Notice No. 6/2011 dated 1.4.2011 was issued for the period from March 2006 to February 2011 proposing to recover the wrongly availed / ineligible CENVAT credit of service tax paid on input services of Rs.2,01,40,209/-. After due process of law, the original authority confirmed the demand along with interest and also imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal.
Conclusion- The Hon’ble Delhi High Court in Lally Automobiles Pvt. Ltd.’s case categorically held that cenvat credit availed on trading activity is not admissible and extended period is invocable. The said judgment has been upheld by the Hon’ble Supreme Court.
Once the audit team of the department has detected the trading activity undertaken by the appellant and in response to the said objection the Appellant reversed proportionate credit on 15.4.2009 for 2008-09, thereafter , it is for the Department to effect recovery of any excess credit for the subsequent period within the normal period of limitation. Suppression of fact cannot be invoked for the period after detection of the fact of availment of inadmissible credit by audit.
Held that the credit availed on common inputs services attributable to the trading activity can be recoverable for the period for the period prior to 01.4.2009 invoking extended period.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant is engaged in manufacture of “Automatic Door Operators and Door Closures” and parts falling under Chapter Sub-heading 83 of CETA, 1985. They are registered with the Central Excise Department and also with Service Tax Department for the taxable services rendered by them. They have been availing CENVAT credit of duty paid on the inputs and input services procured by them locally as well as imported. The appellant was also engaged in trading activity of imported as well as locally procured components and inputs.
2. Based on information that the appellant availed and utilized ineligible CENVAT credit on service tax paid on common input services attributable to trading activity also, the officers of the Headquarters of the Preventive Unit visited the company on 15.6.2009 for verification of accounts. After investigation, it was found that the appellant availed and utilized credit of common input services used for trading as well as for manufacturing activity which is ineligible as trading activity is neither a service nor activity of manufacture. Appellants had not maintained separate accounts for the common input service used for manufacturing activity and trading activity and had not reversed the proportionate credit availed for trading activity. In view of the above, Show Cause Notice No. 6/2011 dated 1.4.2011 was issued for the period from March 2006 to February 2011 proposing to recover the wrongly availed / ineligible CENVAT credit of service tax paid on input services of Rs.2,01,40,209/-. After due process of law, the original authority confirmed the demand along with interest and also imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal.
3. The learned counsel Shri N. Viswanathan appeared and argued for the appellant. He submitted that with effect from 1.4.2011, the CENVAT Credit Rules, 2004 was amended so as to include ‘trading’ as an exempted service. Prior to such amendment, trading was not considered as an exempted service. The appellant was under bonafide belief that as the input services were used commonly for trading as well as manufacturing activity the credit is eligible. There was no intention to commit any fraud, suppression of facts with intent to evade payment of duty. The department has issued the Show Cause Notice invoking extended period alleging that the appellant has suppressed facts with intention to evade payment of duty which is utterly false and baseless. He put forth detailed argument raising the ground of limitation.
4. He submitted that the accounts and records of the appellant were regularly audited by the officers of the department at periodic intervals and the department was very well aware that the appellant was engaged in trading activity. During the audit conducted in the year 2009, an objection was raised on the availment of input service credit of services used for trading as well as manufacturing activity. The appellant had then given reply to the said objection and as an abundant caution so as to show their bonafide had immediately worked out the proportionate common input service credit attributable to trading based on the value of goods traded for the year 2008 – 09 and accordingly paid Rs.35,84,540/- along with interest of Rs.2,25,194/-, The said amount was paid under protest on 15.4.2009. Further from 1.4.2009 onwards, they started availing proportionate common credit attributable to their manufacturing activity only. The communication dated 4.5.2009 was sent to them by the Range Superintendent with regard to the audit objections which would show that department was aware of the credit availed by appellant. The appellant had replied to such objection along with details of the input tax credit availed by them. In spite of having full knowledge about the credit availed in regard to trading activity, the present Show Cause Notice has been issued for the period March 2006 to February 2011 invoking extended period and alleging fraud and suppression with intent to evade duty.
5. He submitted that the demand raised invoking the extended period cannot sustain at all for the reason that the appellant had fully disclosed the details of credit availed in their ER-1 returns and also as and when requested by audit party. The department accepted the payment made by the appellant on 15.4.2009 and the same has been appropriated by the adjudicating authority which would establish that the department was aware about the audit objection raised in the year 2009.
6. The amendment in CENVAT Credit Rules making ‘trading’ as an exempted service by the Explanation added to Rule 2(e) of CENVAT Credit Rules, 2004 came into force only with effect from 1.4.2011. Prior to this date, the law was not clear as to whether trading is an exempted service. The requirement for reversal of the credit and the method that has to be adopted when common input services have been used for trading activity as well as manufacturing activity was under litigation before various forums. Before the introduction of the amendment, by adding Explanation to Rule 2(e) of CENVAT Credit Rules, 2004, there were different judicial pronouncements holding that trading activity cannot be said to be an exempted service. There were conflicting decisions as to whether credit can be availed on input services used for trading and the appellant was under belief that as trading was done in connection with their manufacturing activity, the credit is eligible.
7. The learned counsel submitted that the quantification of demand is without any basis. When the audit had objected, the appellant had reversed the credit after calculating the amount attributable to the trading activity for the year 2008 – 09. They have thereafter availed proportionate credit only for subsequent periods 2009 – 10 and 2010 – 11. However, in the notice, the demand is made for the entire period from March 2006 to February 2011 without considering the proportionate credit reversed by the appellant or the non-availment of credit for the subsequent period from 2009 till 2011.
8. It is further argued by the learned counsel that the quantification of demand is erroneous not only for the reason that the proportionate credit reversed by the appellant was not considered but also for the fact that the department has not considered the application of eligibility of credit in terms of Rule 6(5) of CENVAT Credit Rules. As per this provision, the appellant is eligible to avail credit on certain services though they are used commonly for exempted and taxable services. Further, the demand has been made not on the basis of the proportionate credit in regard to trading but on the basis of the entire input credit availed which is against the provisions of law. He argued that the quantification of demand is totally incorrect and not sustainable.
9. The learned counsel relied upon the decision of the Hon’ble Supreme Court in the case of Jaiprakash Industries Ltd. Vs. CCE, Chandigarh reported in 2002 (146) ELT 481 (SC) to argue that when there are divergent views of different High Courts, the extended period cannot be invoked when there is no evidence for fraud, collusion or willful mis-statement. The decision of the Hon’ble Supreme Court in the case of CCE, Jalandhar Vs. Royal Enterprises reported in 2016 (337) ELT 482 (SC) was relied to argue that unless there is evidence for deliberate attempt to evade duty, the invocation of extended period is not applicable. The learned counsel relied upon the decision of the Tribunal in the case of Medisray Laboratories Pvt. Ltd. Vs. CGST, Kolhapur reported in 2019 (369) ELT 717 (Tri. Mum.) wherein it was held that when audit party has examined the records and pointed out deficiencies in respect of inadmissibility of credit, it cannot be said that there is suppression of facts. The jurisdictional High Court in the case of Assistant Commissioner of GST and Central Excise, Chennal Vs. Shriram Value Services Pvt. Ltd. reported in 2019 (368) ELT 928 (Mad.) has held that there were conflicting decisions during the relevant period holding that trading activity is an exempted service and the position prior to 1.4.2011 was doubtful. Therefore extended period of limitation is not invokable.
10. The learned counsel submitted that major part of the demand is time-barred.
11. The learned AR Ms. Sridevi Tritula supported the findings in the impugned order. She submitted that although the amendment by adding Explanation to Rules 2(e) of the CENVAT Credit Rules, 2004 was introduced with effect from 1.4.2011 only, trading being neither a service nor manufacturing activity, the appellant cannot avail credit of services used for trading activity. During the disputed period, the appellant has availed credit on common input services used for trading as well as manufacturing activity. The error would not have come to light but for the verification done by the department. Hence the demand raised invoking the extended period is legal and proper. She prayed that the appeal may be dismissed.
12. Heard both sides.
13. The learned counsel for appellant has stressed his arguments on limitation. His first contention is that during the audit in the year 2009, an objection was raised by the audit party that the appellant has availed ineligible credit on services used for trading activity. The appellant then paid an amount of Rs.35,84,540/- on 15.4.2009 along with interest of Rs.2,25,194/-. From 1.4.2009 onwards they have stopped taking credit in regard to trading activity and they were availing credit of common input service that is attributable to their manufacturing activity only. In page 85 of the appeal memo, a letter dated 15.4.2009 issued by the appellant to the Superintendent of Central Excise, Internal Audit Group is seen enclosed. It shows endorsement of the Superintendent on the same day i.e. 15.4.2009. This letter is reply to the objection raised by audit party with regard to the availment of input credit in regard to trading activity. The relevant part is as under:-
“Please refer to your objection with regard to the availment of input service tax by us even while engaged in the trading activities and the further discussions you had with the undersigned advising orally to reverse the proportionate possible Service Tax Credit availed in respect of our trading activity, for the periods 2005 – 2006, 2006 – 200Z 2007- 2008, 2008 – 2009.
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We however state that since the issue involved is one being legally debatable, we have decided to remit an amount of Rs.35,84,540/-(Rupees thirty five lakhs eight four thousand five hundred forty only) being the proportionate possible service tax utilized for rendering the trading activity UNDER PROTEST as per the formula prescribed under rule 6 of the CENVA T Credit Rules, as advised by your goodself without prejudice to our submissions on merits recorded herein before. We however submit that since the facts of the case clearly establish no malafide we cannot be subject to the proviso to Sec. 11A of the Act read with Rule 14 of the CENVA T Credit Rules, we are restricting the payment only for the normal period that is for the period 2008 – 2009. We further submit that our act of remitting the amount may not be concluded to mean that we have accepted our liability.
As requested, we are also enclosing a draft working sheet on the possible utilization of service tax credit for the traded activity, for the years 205 – 2006, 2006 – 2007, 2007 – 2008 and 2008 – 2009.”
14. In page 111, a copy of letter dated 1.11.2006 issued by the Department to the appellant is enclosed. Reference 5 in the said letter indicates the decision to furnish details with regard to trading activity and service tax input credit taken for the year 2006. The letter dated 16.1.2007 issued by the appellant shows that they have furnished documents sought by the department as per their earlier dated 1.11.2006. A letter dated 11.5.2009 was issued to the appellant by the department wherein the discrepancies noted are stated to be as under:-
“(i) Wrong input service credit availed on the input service used in trading goods – Rs.4,51,83,907/-“
15. The above documents clearly show that the department was fully aware that the appellant was availing credit in respect of common services used for trading. They had also received details as and when requested. However, the Show Cause Notice has been issued only on 1.4.2011 invoking the extended period. Though it is alleged that the appellant has indulged in suppression of facts with intent to evade duty, there is no positive evidence adduced by the department to show that there has been any suppression of facts. A vague allegation cannot take the place of positive evidence. The allegation of suppression of facts with intent to evade payment of duty being a serious one, the department has to furnish evidence to show that the appellant has indulged in some sort of positive act of suppression. Such evidence is lacking in the present case. In fact, there has been full cooperation by the appellant in furnishing necessary documents / details and also by making payment of amount when they were intimated that they have wrongly availed the credit.
16. The Hon’ble jurisdictional High Court in the case of Shriram Value Services Pvt. Ltd. (supra) has considered a similar issue wherein the demand was in respect of credit availed on trading activity. The Hon’ble High Court held that extended period of limitation is not invocable as they were conflicting decisions during the relevant period. The relevant portion of the judgment is extracted hereunder:-
5. The Learned Tribunal, in the order impugned in the present Appeal, has held as under ..-
“5 The main contention put forward by the appellant is on the ground of limitation. The period involved is from April 2009 to March 2011 whereas the show cause notices have been issued invoking the extended period of limitation. The Ld. Counsel for the appellant has submitted that there was conflicting decisions during the relevant period holding that trading activity is an exempted service and is eligible for credit. Indeed, the position prior to 1-4-2011 was doubtful and there were decisions in favour of assessee as well as Revenue. Only after 1-4-2011, the position was settled by adding Explanation to the definition of exempted services which made trading activity to be a deemed exempted service. It is very much clear from the facts of the case that the appellant have been maintaining separate records for the common inputs used in trading and taxable output service. This itself brings out the bona fide belief of the appellant that they were under the impression that their activity is an exempted service and would be able to avail credit by following the procedures under Rule 6 (2) and (3). Further, they have been filing Service Tax returns regularly and they have been subjected to periodical audit. Even in CERA audit, the said objection was not raised on the avallment of credit on common input services used for trading and taxable outcome service. In such circumstances, the appellant cannot be saddled with intention to evade payment of Service Tax. There is no other evidence brought out by the department to conclude that the appellant is guilty of suppression of facts with intent to evade payment of service tax so as to invoke extended period of limitation. We therefore conclude that the show cause notice is time-barred.
6. In the result, the impugned order is set aside and the appeals are allowed on the ground of limitation, with consequential relief, if any.”
6. From the above, it is clear that the position was clarified by the Government by insertion of Explanation only with effect from 1-4-2011 that the trading activity will be Exempted Services. The Explanation is clarificatory in nature and can be held to be applicable even for the past period. Thus, at the relevant period of time, viz, from April 2009 to March 2011, the Assessee was, obviously, under bona fide belief in view of the conflicting decisions of the Tribunals during that period and taking the trading activity as Exempted Services, availed the CENVA T Credit which is sought to be reversed and recovered by the Department invoking the extended period of limitation. Such a bona fide belief cannot be held to be done with ulterior purpose for evading the Duty and therefore, the extended period of limitation would not be available to the Revenue Authority in view of the aforesaid decision rendered by the Hon’ble Supreme Court.
7. The judgments relied upon by the Learned Counsel for the Revenue viz., Gujarat High Court’s decision in CCE V. Neminath Fabrics Pvt. Ltd. as well as decision of a Division Bench of this Court in the case of M/s. King Bell Apparels (supra) are not applicable to the facts of the present case as even without attributing any knowledge to the Revenue Authority about such dispute, the fact remains that in view of the Explanation inserted later on in favour of the Assessee for the period prior to 1-4-2011, the Revenue Authority cannot be permitted to reverse such CENVAT Credit and recover the Duty, alleged to have been evaded by the Assessee, invoking the extended period of limitation under Section 11A of the Act.
8. Therefore, the controversy stands covered by the Supreme Court decision in Kolety Gum Industries case (supra), relied upon by the Learned Counsel for the Assessee and the present Appeal of Revenue is found to be devoid of any merit and the same is liable to be dismissed. Accordingly, it is dismissed. No costs.”
17. The Hon’ble Supreme Court in the case of Jaiprakash Industries Ltd. (supra) has observed as under:-
“8. In this case, there was a divergent view of the various High Courts whether crushing of bigger stones or boulders into smaller pieces amounts to manufacture. In view of the divergent views, of the various High Courts, there was a bona fide doubt as to whether or not such an activity amounted to manufacture. This being the position, it cannot be said that merely because the Appellants did not take out a licence and did not pay the duty the provisions of Section 11A got attracted. There is no evidence or proof that the licence was not taken out and/or duty not paid on account of any fraud, collusion, wilful mis-statement or suppression of fact. We, therefore, set aside the demand under the show cause notice dated 3rd May, 1993.
9. As regards the demand under the show cause notice dated 26th February, 1992, Mr. Sridharan states that the Appellant has already paid the amount. He states that he is not pressing this Appeal in respect of the demand under that show cause notice. Thus we see no reason to decide the other question, viz, whether crushing of stones amounts to manufacture and whether a new product has come into existence. We leave this question open.”
18. In the case of Royal Enterprises (supra), the Hon’ble Supreme Court held as follows:-
“2. In this case parties addressed only on the point of limitation. It was contended before the adjudicating authority as well as the Tribunal that the department could not invoke the extended period of limitation as all facts were already to the knowledge of the department. On this the Tribunal in Para 6 has recorded the following finding
“6. It is clear that details of the appellant’s fabrication work for Railway Coach Factory including supply of raw material by the Coach Factory were known to the Revenue authorities for quite some time. As early as 1992, the appellant’s contracts, sales invoices etc. relating to his work for Railway Coach Factory had been summoned and obtained by the Revenue authorities. All these contracts indicated issue of raw materials by the Railway Coach Factory to the appellant upon the appellant executing bank guarantee. The orders for fabricating bottom side wall sheet was also on the same basis. Order number were being indicated in the invoices under which the goods were cleared. It would appear that a mere look at the rates for fabrication should have alerted the excise authorities to the fact that such a low rate (Rs. 590/- per set etc.) could not include the cost of raw materials. Be that as it may, this is not a case where a charge of suppression of facts with intent to evade payment of duty could reasonably be made. If reasonable care had been taken by the Revenue authorities to scrutinize the contracts and other documents produced, they would have known in time that fabrication charges alone was being treated as assessable value. Maybe, Revenue was also of the opinion that fabrication charges alone was liable to duty. In either case, fault is not of the appellant. Relevant facts had been disclosed.”
3. This Court, in the case of Collector of Central Excise v. Chemphar Drugs & Liniments [1989 (40) E.L.T. 276 (S.C.)J, has held that in order to make the payment for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to Section 11A of the Act it has to be established that the duty of excise has not been paid or levied or short-paid or short-levied or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provisions of the Act or Rules made thereunder, with intent to evade payment of duty. It was observed :
a…… Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence.
9. In that view of the matter and in view of the requirements of Section 11A of the Act, the claim had to be limited for a period of six months as the Tribunal did. We are, therefore, of the opinion that the Tribunal was right in its conclusion. The appeal therefore fails and is accordingly dismissed”
4. Similarly, in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay [1995 (78) E.L.T 401 (S.C.)1, it was held that mere omission to disclose the correct information would not amount to suppression of facts unless there was a deliberate attempt made to escape the payment of duty. Where facts are known to both the parties it cannot be held that there was suppression of facts. It was observed in Para 4 as follows .•
“4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.”
5. We agree with the view taken by the Tribunal that there was no suppression of facts on the part of the respondent-assessee and the department was not entitled to invoke the extended period of limitation. Accordingly, this appeal is dismissed. No costs.
19. From the facts and evidence placed before us as well as following the ratio laid in the above judgments, we have no hesitation to conclude that there are no grounds to invoke the extended period of limitation. However, part of the demand would fall within the normal period. The same has to be quantified.
20. From the foregoing, we set aside the demand which falls within the extended period and remand the matter to the adjudicating authority to requantify the demand for the normal period. In such quantification procedure, the adjudicating authority shall consider the contention of the appellant that they have not availed input credit on trading activity after 1.4.2009. So also the adjudicating authority has to verify whether the demand has been made on the entire input credit or the common input credit only. Needless to say that the demand has to be calculated on the basis of common input credit for the normal period and not the entire input credit for the normal period. The appellant is eligible for adjustment of amount that has been already paid in the proceedings.
21. We have already discussed that there were conflicting views during the relevant period. Moreover, in the absence of evidence of suppression of facts, we are of the view that all the penalties imposed are unwarranted. The same are set aside.
22. The impugned order is modified to the extent of setting aside the demand for the extended period and remanding the matter to the adjudicating authority for the limited purpose of quantifying the demand for the normal period. All the penalties imposed are set aside. The appeal is partly allowed in the above terms with consequential benefits, if any.
(Pronounced in open court on 27-09-2023)
(SULEKHA BEEVI C.S.)
Member (Judicial)
(SANJIV SRIVASTAVA)
Member (Technical)
Per : Sanjiv Srivastava
1. I have gone through the order prepared by learned Member (Judicial) and express my full agreement with the issues decided in respect of merit of the case. She has held that during the period covered by the show cause notice and impugned order, the appellant was required to reverse the cenvat credit availed by them in respect of the input services used by them towards trading activities. However, I find it difficult to persuade myself with regard to the findings recorded in respect of the limitation.
2. On the issue of limitation, Commissioner has in paragraph 26 of the impugned order recorded as follows :
“26. The next issue for consideration is whether the demand is time barred as contended by the Noticee.I find that an Offence case had also been registered against the assessee vide OR No.02/2010-11 dated 3.05.2010 for availing & utilizing ineligible Cenvat credit of Service Tax paid on the common input service attributable to Trading Activity for the period from 03/2006 to 02/2011. The noticee contends that various facts and documentary evidences brought in their reply clearly showed knowledge on the part of officers with regard to their availing and utilizing the input service tax credit on common services and the matter purely related to the question of interpretation. It is seen that the assessee has been availing Cenvat credit of Service tax from March 2006 onwards although the provisions of allowing credit of service tax on input services came into force from 10.09.2004 onwards. Though the assessee has knowledge of availing credit on input services which are also utilised for trading activity, they did not make any effort to workout and payback the proportionate credit till the lapse was pointed out by Audit and subsequently got thoroughly investigated by the Officers of the Headquarters Preventive unit. Under self assessment scheme, the burden of proof regarding the admissibility of the CENVAT credit is placed upon the manufacturer or the provider of the output services taking such credit as envisaged under Rule 9 (6) of the CENVAT Credit Rules, 2004. Further, the Monthly returns filed to not cover all the activities especially trading of goods which is not covered under levy of Excise or Service Tax. It is therefore clear that the assessee suppressed fact to the department willfully, with an intent to avail excess credit relating to “trading activity” in order to evade reversal/payment of proportionate ineligible CENVAT credit of Service tax paid on the “Common input-services” attributable to Trading activity causing loss to the Government and hence, the extended period of time limit under proviso to section 11A of Central Excise Act 1944 has been rightly invoked for demanding the same. Since the assessee is liable for payment of the credit wrongly availed, I also hold that they are liable for interest on such credit under Rule 14 of the CENVAT Credit Rules, 2004 readwith Section 11ab OF THE Central Excise Act, 1944.”
2. The limitation is a question of fact dependent upon the existence of the various ingredients as per Section 11A of Central Excise Act, 1944. On the basis of facts of each case, it is required to be determined whether the case is fit for invocation of extended period of limitation and the demand needs to be limited in the normal period. As this is a question of fact, there cannot be any binding precedence determining the facts in this case. Hence the reliance placed on various decisions cannot be justified because precedence can be on question of law and not on the question of determining of facts.
3. Examining the facts of the case, I find that as per sub rule (3) and (3A) of Rule 6 in terms of which the appellant is required to make the reversal of the cenvat credit availed by them on the common input services provide a procedure for making (i) a declaration to that effect (ii) reversal of the credit on provisional basis (iii) finalization of the reversals on the yearly basis by the prescribed date. For the period in dispute, the appellant has not shown any evidence by which it can be said that they have made any such declaration or reversals prescribed. Accordingly, in my view, by not following the said procedure, they have suppressed the material facts from the Department at the relevant time.
4. In para-14 at page 8 of the order, learned Member (Judicial) has referred to letter dated 01.11.2006 vide which Revenue has sought certain information from the appellants. It appears that the text of the letter has been modified with the remark stating “Details of Trading, Service Tax input credits taken, B/S for PY were given to IA Team. IA during 2006”. The scanned copy of letter dated 01.11.2006 is as below :
The said remark which is in pen is pasted on the original letter which is the standard format issued by the Internal Audit of the Revenue. This letter was responded by the appellants by letter dated 17.11.2006, 21.11.2006, 16.01.2007. This also does not show that the details in respect of trading services vis-à-vis Rule 6 (3) and (3A) were furnished. There is another letter dated 23.07.2007 of the Department seeking certain details. However, this letter also do not specify that these details were ever made available to the Revenue.
5. Only by the letter dated 21.07.2008 it appears after visit of the audit party, it was noted that there were also trading activities on certain goods in the manufacturing premises and accordingly, the details were called for the years 2003-04, 2004-05, 2005-06, 200607 and 2007-08. In my view, appellants failed to produce any document or record to show that these facts were ever made known to the Department. It is also worthy of noting that it is not even the submission of the appellant that these similar details were mentioned in the E.R.-1 Returns filed by them during the material time. No column is indicated whereby it is shown that appellant made any such declaration on the said returns even when they were receiving the some traded goods in their factory premises and packing them and affixing their logos on the same and then trading them. In absence of any evidence to this effect, I do not find any material evidence available to show that the facts which were specifically in the knowledge of the appellant were ever disclosed to the Department during the material periodi.e. till the Audit in April 2008 and visit of Preventive Team during June 2009. Interestingly, the appellants have vide letter dated July 7, 2009, which is reproduced below, stated as follows :
“The Assistant Commissioner of Central Excise,
Chennai II Commissionerate
MHY Complex, 692, Anna Salai,
Chennai — 600 035.
Dear Sir,
Sub : Intimation with regard to payment of Excise Duty on Certain Removals — Reg.
Ref :i) Visit of HQ Preventive Team to our Premises during June 2009.
ii) Visit of Audit Team on April 2009.
This is with reference to the above, we hereby give below the details of out DUTY Payment along with Interest on the following :
