Extended period of limitation for periodical returns submitted & accepted by audit team but disputed later

Extended period of limitation cannot be invoked where periodical returns were filed promptly and accepted by audit team but disputed at the time of second audit conducted

Urja Engineers Limited (the Appellant) availed the ineligible Cenvat credit and the same was duly reflected in the periodicalreturns filed with the Department. The unit of the Appellant was audited by both the Internal Department’s Audit Team as well as CERA but no objection was raised by them.

However, the Second Audit Party noticed the mistake and proceedings were initiated against the Appellant by invoking the extended period of limitation under Section 11A of the Central Excise Act, 1944 (“Excise Act”).

Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Ahmedabad.

The Appellant argued that the extended period of limitation cannot be invoked and relied upon the following case laws: –

• Rajasthan Warehousing Corpn. Vs. CCE Jaipur [2011 (23) STR 385 (Tri. Del.)];
• CCE Bangalore Vs. MTR Foods Limited [2011-TIOL-696-HC-KAR-CX];
• Garrison Polysacks Pvt. Limited Vs. Commissioner of Service Tax Vadodara [2013 (292) ELT 513 (Tri. Ahmd.)](“Garrison case”);
• CCE Kolkata Vs. ITC Limited [2013 (291) ELT 377 (Tri. Kol.)]

The Hon’ble CESTAT, Ahmedabad relied on the decision inGarrison caseand held that in terms of the proviso of Section 11A of the Excise Act,extended period of limitation cannot be invoked as the periodical returns were filed promptly by the Appellant and it was clearly mentioned in the returns that they had availed the said ineligible Cenvat creditwhich was duly accepted by the First Audit Party.

Accordingly, the appeal filed by the Appellant was allowed with consequential relief.