The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a central excise duty demand of over Rs. 96 lakh raised against a leading tyre manufacturer, holding that the tax department wrongly invoked the extended period of limitation without establishing wilful suppression or intent to evade duty.
In its final order pronounced on December 16, 2025, the Principal Bench of CESTAT ruled that merely because an alleged irregularity came to light during audit, the department could not automatically allege suppression of facts and invoke the extended five-year limitation under Section 11A(4) of the Central Excise Act, 1944.
The case arose from an audit conducted by the central excise department for the financial years 2016–17 and 2017–18 at the assessee’s manufacturing unit in Pithampur, Madhya Pradesh. During the audit, the department alleged that excess CENVAT credit amounting to ₹96,02,623 had been availed for the period April 2017 to June 2017 due to improper allocation by the Input Service Distributor (ISD), allegedly in violation of Rule 7 of the CENVAT Credit Rules, 2004.
Based on the audit objection, a show cause notice was issued in January 2022 invoking the extended limitation period of five years, alleging suppression of facts and proposing recovery of the credit along with interest and penalty.
The adjudicating authority confirmed the demand in May 2022, holding that the assessee had deliberately suppressed material facts by not submitting proportional details of CENVAT credit received from the ISD. The Commissioner (Appeals) upheld this view in August 2023, concluding that the ER-1 returns filed by the assessee contained only a summary of credit and did not disclose detailed allocation, thereby justifying invocation of the extended period.
Allowing the appeal, the CESTAT observed that the assessee had disclosed the availment of CENVAT credit in its statutory ER-1 returns. The Tribunal noted that ER-1 returns do not require disclosure of detailed break-up or proportional allocation of CENVAT credit. If the department had any doubts, it could have sought further details at the time of scrutiny of returns, rather than waiting for an audit years later.
The Bench emphasised that for invoking the extended limitation under Section 11A(4), the department must prove not only suppression of facts but also that such suppression was wilful and with intent to evade duty. Relying on settled law laid down by the Supreme Court, the Tribunal reiterated that “suppression” must be deliberate and cannot be inferred merely from omission or because the issue surfaced during audit.
“Mere discovery of facts during audit does not, by itself, justify invocation of the extended period. The department must demonstrate conscious and intentional withholding of information,” the Tribunal held.
Since the entire demand related to the period April–June 2017 and the show cause notice was issued only in January 2022, the Tribunal concluded that the demand was wholly time-barred under the normal limitation period. As the extended period was found to be wrongly invoked, the demand could not be sustained in law.
CESTAT set aside the order of the Commissioner (Appeals) and allowed the appeal, without examining the case on merits
Case Details
Case Title: M/s Bridgestone India Pvt. Ltd. Versus Commissioner of Central Excise & CGST
Case No.: Excise Appeal No. 51840 Of 2024
Date: 16/12/2025
Counsel For Appellant: Vikash Agarwal, Consultant
Counsel For Respondent: S.K. Ray, authorized representative
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