2016 (4) TMI 1149 - AT - Central Excise

Wrong availment of CENVAT Credit - appellant have availed CENVAT Credit of the certain services received exclusively for use in respect of exempted products and therefore, they were not entitled to avail credit on the same - extended period invoked - Held that - The credit taken by the appellant is clearly inadmissible as the said services were used for the purpose of a totally exempted final product. This is an undisputed fact. The appellant s contention that they had declared the same correctly in their return is mis-placed. Also find that the declaration (b) of the Self Assessment Memorandum is incorrect as they have not taken the credit as per law. This fact has not been disputed by them. Furthermore, in the era of self assessment, the onus of taking credit correctly has been put on the appellant and this self assessment memorandum requires them to take the credit correctly and as per law. Further, in view of the observation of the Tribunal in the case of Balmer Lawrie & Co. (2014 (2) TMI 545 - CESTAT MUMBAI ) find that the extended period can be invoked in such circumstances. - Decided against assessee

Summary

Issues:
1. Wrong availment of CENVAT Credit for exempted products.
2. Time-barred show-cause notice.
3. Invocation of extended period for denial of credit.

Analysis:
1. The appellant was issued a show-cause notice for wrong availment of CENVAT Credit on services exclusively used for exempted products. The demand was confirmed by the original adjudicating authority and the first appellate authority. The appellant argued that the show-cause notice was time-barred as it was issued after the credit was taken during 2005-2009. The appellant claimed they had declared the credit in their returns and thus, the extended period could not be invoked.

2. The learned AR contended that it is the assessee's responsibility to take credit correctly, and the extended period can be invoked for inadmissible credit taken in violation of the law. He relied on a Tribunal decision and emphasized the importance of disclosing all relevant information regarding credit availed. The Tribunal's decision supported the invocation of the extended period in cases where crucial information, like the intended use of credit, was not disclosed to the department.

3. The judge found that the credit taken by the appellant was clearly inadmissible as it was used for an exempted final product. Despite the appellant's claim of declaring the credit correctly in their returns, the judge noted that the Self Assessment Memorandum signed by the appellant stated otherwise. The judge emphasized that the onus of correctly availing credit lies with the appellant, especially in the self-assessment era. Citing the Tribunal's previous ruling, the judge upheld the invocation of the extended period due to the appellant's failure to adhere to the law regarding credit availed.

In conclusion, the appeal was dismissed based on the findings that the appellant had wrongly availed CENVAT Credit for exempted products, failed to declare the credit correctly as per law, and therefore, the extended period for denial of credit was valid in this case.