Pranav B Prem

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a central excise demand of ₹96.02 lakh raised against Bridgestone India Private Limited, holding that the department had wrongly invoked the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944. The Tribunal held that mere detection of an issue during audit cannot justify invocation of the extended limitation, particularly when the assessee had disclosed the availment of CENVAT credit in its ER-1 returns.

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The Bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Member–Technical) was hearing an appeal filed by Bridgestone India challenging an order passed by the Commissioner (Appeals), which had upheld the demand of excise duty along with interest and penalty for the period from April 2017 to June 2017. The demand had arisen pursuant to an audit objection alleging that excess CENVAT credit amounting to ₹96,02,623 was received by Bridgestone through an Input Service Distributor (ISD) in violation of Rule 7 of the CENVAT Credit Rules, 2004.

The show cause notice was issued on January 17, 2022, invoking the extended limitation period of five years on the ground that the alleged irregularity came to light only during departmental audit and that Bridgestone had suppressed material facts with intent to evade payment of duty. The adjudicating authority accepted this reasoning, observing that had the audit not been conducted, the alleged excess availment of credit would have remained undetected. This view was affirmed by the Commissioner (Appeals), who held that since the ER-1 returns reflected only a summary of CENVAT credit and not detailed break-ups, the assessee had willfully suppressed facts.

Before the Tribunal, Bridgestone contended that complete disclosures were made in the ER-1 returns as required under law and that the extended period of limitation could not be invoked merely because the issue was detected during audit. It was argued that the ER-1 return format does not mandate disclosure of detailed particulars of CENVAT credit and, therefore, non-furnishing of such details could not amount to suppression.

Examining the issue, the CESTAT noted that it was undisputed that Bridgestone had disclosed the availment of CENVAT credit in its ER-1 returns. The Tribunal rejected the finding of the Commissioner (Appeals) that suppression could be inferred merely because the returns contained only a summary. It held that an assessee is required to disclose only such particulars as are specifically provided for in the statutory return, and the ER-1 return does not require disclosure of detailed CENVAT credit particulars. The Bench observed that if the department had any doubts, it was always open to the officers to scrutinize the returns and seek additional information from the assessee.

The Tribunal reiterated that for invoking the extended period under Section 11A(4), suppression must be deliberate and accompanied by intent to evade payment of duty. Relying on settled legal principles, including the Supreme Court’s decision in Pushpam Pharmaceutical Co. v. Commissioner of Central Excise, the Bench emphasized that suppression cannot be inferred from a mere omission and must involve a conscious act to withhold information. It further observed that a bald allegation in the show cause notice, without specifying which facts were concealed or which columns of the return were wrongly filled, does not satisfy the statutory requirement.

Significantly, the Bench held that merely because the facts came to the notice of the department during audit would not, by itself, be sufficient to invoke the extended period of limitation. It noted that nothing prevented the departmental officers from examining the returns filed by the assessee at the relevant time and seeking clarification, if required.

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Since the show cause notice was issued well beyond the normal limitation period of two years and the conditions necessary for invoking the extended period were not satisfied, the Tribunal held that the entire demand was time-barred. In view of this finding, the CESTAT set aside the impugned order passed by the Commissioner (Appeals) and allowed the appeal, without examining the merits of the demand.

Appearance

For the Appellant: Shri Vikash Agarwal, Consultant for the appellant

For the Department: Shri S.K. Ray, Authorised Representative

Cause Title: Bridgestone India Pvt. Ltd. v. Commissioner of Central Excise & CGST

Case No: Excise Appeal No. 51840 of 2024

Coram: Justice Dilip Gupta (President), P.V. Subba Rao (Member–Technical)