2024-VIL-364-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Rule 6(3A) of CENVAT Credit Rules, 2004 - Manufacture of dutiable and exempt goods - Reversal of credit - Manufacture and supply of footwear with RSP of less than Rs. 500/- per pair, which are exempted from payment of central excise duty and the footwear with RSP over Rs. 500/- which are liable to duty - while reversal of Cenvat Credit appellant considered the footwear with RSP below Rs. 500/- per pair as exempted but did not consider the value of the footwear costing over Rs. 500/- per pair but which it had packed/re-packing or labelled/relabelled etc and cleared claiming the conditional exemption Notification No. 12/2012-CE – Demand for reversal of Cenvat credit - whether the goods cleared claiming benefit under Notification No. 12/2012-CE dated 17.03.2012 could be considered as exempted goods for the purpose of calculation under rule 6(3A) of CCR, 2004 – HELD - Goods cannot be both dutiable and exempted at the same time depending on the convenience of the assessee - It also does not matter if the exemption notification was conditional or unconditional. If the notification is conditional and the appellant fulfils the conditions, it can claim the benefit of exemption notification. If it does not fulfil the conditions, it will not be entitled the benefit of the notification - the goods cleared by the appellant were chargeable to duty but were exempted by the Notification No. 12/2012-CE. Under these circumstances, it cannot be said that they should be treated as dutiable although the exemption notification was claimed and no duty was paid - The submission of the appellant is that the RSP was the same on the footwear which it had purchased and the footwear which it had sold and, therefore, if it had paid duty it could have claimed an equal amount as CENVAT credit and the goods should be treated as duty paid, cannot be accepted - the amount of CENVAT credit available on the inputs and the amount which needs to be paid as duty on the final products cannot determine whether the goods are dutiable or exempted - the goods cleared by the appellant claiming the benefit of Notification No. 12/2012-CE (Sr. No. 179) are clearly exempted goods as the appellant had claimed the benefit of exemption notification and should have been considered as such while calculating the amount of CENVAT credit to be reversed under rule 6(3A) of CCR – however, the entire period of demand in this case is beyond the normal period of limitation and hence the demand is time barred - The impugned order is set aside and the appeal is allowed on Limitation – Ordered accordingly - Claim of Revenue neutrality - revenue neutrality, per se, does not extinguish the liabilities of the assessee. The entire exercise could be revenue neutral or even revenue negative - The concept of revenue neutrality was only brought in through a series of judicial pronouncements for the limited purpose of determining if the assessee could have had “an intention to evade” to justify invoking extended period of limitation while raising the demand under section 11A of CEA, 1944. The settled legal position is that if the entire exercise is otherwise revenue neutral, the assessee could not have had any intention to evade and, therefore, extended period of limitation cannot be invoked. So far as the normal period of limitation is concerned, revenue neutrality or even revenue negativity makes no difference to the application of the provisions of the law - Invocation of extended period of limitation – HELD – The presumption that any wrong assessment by the assessee working under self-assessment regime would tantamount to evade payment of duty has no legal basis. There is no such legal presumption in law. It is for the department to prove that one of the elements required to invoke the extended period of limitation were present in the case. It makes no difference if the assessee is operating under self-assessment as every assessee operates by self-assessment. It must also be noted that if the excise returns require information in a particular form and once it has been provided as required, the assessee has no further responsibility. It is for the assessing officer to scrutinize the returns as it is required to do, call for any accounts and records, as it is authorized to do and verify the self-assessment and issue a demand within the normal period of limitation. If the assessing officer fails to do so and any short payment comes to light subsequently during audit, etc., the responsibility for that rests squarely on the assessing officer and not on the assessee. Indisputably, the entire period of demand in this case is beyond the normal period of limitation and hence the demand is time barred.
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