ER-1 Returns Don't Require Detailed CENVAT Disclosure; Extended Limitation Not Invocable: CESTAT Delhi

A Bench of the Customs, Excise and Service Tax Appellate Tribunal comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Member–Technical) while hearing the appeal filed by Bridgestone India against an order of the Commissioner (Appeals), which had upheld the demand of excise duty along with interest and penalty for the period April 2017 to June 2017. The demand arose from an audit objection alleging that excess CENVAT credit was received through an Input Service Distributor (ISD) in violation of Rule 7 of the CENVAT Credit Rules, 2004.

The Bench stated that merely because facts came to the notice of the department when the audit was conducted would not by itself be sufficient for invocation of the extended period of limitation. Nothing prevented the officers of the department from scrutinizing the returns filed by the assessee

The show cause notice was issued in January 2022, invoking the extended limitation of five years under Section 11A(4) of the Central Excise Act, 1944, on the ground that the alleged irregularity came to light only during departmental audit and that Bridgestone had suppressed material facts.

Both the adjudicating authority and the Commissioner (Appeals) accepted this reasoning, holding that since the ER-1 returns reflected only a summary of CENVAT credit and not detailed break-ups, the assessee had willfully suppressed facts with intent to evade duty.

Setting aside these findings, the CESTAT noted that Bridgestone had duly disclosed the availment of CENVAT credit in its ER-1 returns. It emphasized that the ER-1 return format does not require detailed disclosure of CENVAT credit particulars, and therefore non-furnishing of such details cannot be treated as suppression.

The Bench observed that if the department had any doubts, it was always open to scrutinize the returns and seek additional information. It also observed that merely because the issue was detected during audit does not automatically justify invoking the extended period.

The Bench reiterated that suppression must be deliberate and accompanied by intent to evade duty. A bald allegation in the show cause notice, without specifying what facts were concealed or which return columns were wrongly filled, does not satisfy the statutory requirement for invoking Section 11A(4).

Since the show cause notice was issued well beyond the normal limitation period of two years and the conditions for extended limitation were not met, the Bench held that the entire demand was time-barred.

In view of the above, CESTAT set aside the impugned appellate order and allowed the appeal, without examining the merits of the demand

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

Case No.: Excise Appeal No. 51840 of 2024

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

Appearance for the Department: Shri S.K. Ray, Authorised Representative

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