CESTAT | Mere failure to declare information does not amount to willful misdeclaration unless deliberate attempt to evade duty found

Customs, Excise & Service Tax Appellate Tribunal (CESTAT): This appeal was filed before S.S. Garg, J., directed against the order passed by the Commissioner whereby the Commissioner had remanded the matter to the original authority with direction to rework the actual CENVAT credit admissible based on the excise invoices produced by the appellant.

Appellants were manufacturers of readymade garments under the Central Excise Tariff Act, 1985. They had received inputs under the commercial invoices where invoices were not containing the particulars evidencing payment of duty and utilized CENVAT Credit Rules, 2002 which suggested that the said commercial invoices were not proper documents as envisaged under Rule 7 of CENVAT Credit Rules, 2002. It was found that the appellants had suppressed the above facts with an intention to avail ineligible credit. Due to which a show cause notice was issued demanding recovery under Section 11-A(1) of the Act read with Rule 12 of the Rules. Further, a penalty equivalent to the above amount under Section 11-AC was imposed.

It was submitted that appellant had taken the CENVAT credit on commercial invoices which were not the proper document for taking the CENVAT credit. Appellants had failed to produce the excise invoices before the original authority. Commissioner had recorded that there was a statement of appellant explaining the procedure regarding availment of CENVAT credit, which shows that the appellants had not suppressed the relevant information from the Department.

Tribunal was of the view that mere failure to declare the information does not amount to willful misdeclaration or willful suppression unless there was a deliberate attempt to evade duty. Tribunal viewed that the entire demand was barred by limitation. Therefore, no reason to decide the case on merits were found and the impugned order was set aside. [Arvind Brands Ltd. v. CCE, 2019 SCC OnLine CESTAT 7, Order dated 01-03-2019]

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