2015 (7) TMI 1196 - AT - Service Tax

CENVAT credit - denial on the ground that credit availed without proper/valid documents - demand of credit - penalty - Held that - no specific allegations have been made in the SCN as to why the invoices on which cenvat credit has been taken by the appellant, should not be considered as proper/ valid documents and how the provisions of Rule 3 & 4 of the CCR, 2004 have been contravened. The SCN has been issued solely based on the objections raised by the Audit Wing during their visit to the factory of the appellant in the month of January 2007. Further, the SCN has not specifically alleged the involvement of the appellant in any fraudulent activities concerning suppression, misstatement, collusion, with intent to avail the cenvat credit. Extended period of limitation - Held that - for invoking extended period of limitation, the SCN has only alleged that the assessee has never informed the department regarding the availment of cenvat credit and the said fact only came to the notice of the department during the course of audit of records. In absence of any specific allegation of the ingredient mentioned in the proviso to Section 73(1) of the FA, 1994, the extended period cannot be invoked, justifying confirmation of the demand beyond the period of one year. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against the order confirming demand for wrongly availed cenvat credit and imposition of penalties under Rule 15(1) and 15(2).
- Whether the extended period of limitation can be invoked for confirming the demand beyond one year.
- Allegations of suppression, misstatement, and intent to evade payment of service tax without tangible evidence.
- Applicability of judgments in similar cases to the present dispute.

Analysis:
1. Demand for wrongly availed cenvat credit and penalties:
The appellant, engaged in the manufacture of VP Sugar and Molasses, faced show cause proceedings for taking cenvat credit without proper documents. The Central Excise Authorities confirmed the demand for cenvat credit, interest, and penalties under Rule 15(1) and 15(2). The Commissioner (Appeals) upheld the demand, except for the penalty under Rule 15(1). The main issue in this appeal was the confirmation of cenvat demand and the penalty under Rule 15(2).

2. Extended period of limitation:
The Tribunal noted that the show cause notice (SCN) did not contain specific allegations regarding why the invoices for cenvat credit were improper or how rules were contravened. The SCN relied solely on audit objections without alleging fraudulent activities by the appellant. The Tribunal held that the extended period of limitation could not be invoked without specific allegations under the proviso to Section 73(1) of the Finance Act, 1994. Citing relevant judgments, the Tribunal emphasized the need for tangible evidence to prove suppression or misstatement for invoking the extended period.

3. Allegations without tangible evidence:
The Tribunal distinguished a judgment cited by the Department where suppression was proven with tangible evidence. In the present case, although allegations of suppression and misstatement were made, no concrete proof was provided. The Tribunal emphasized the importance of proving malafied activities with intent to defraud the Revenue. As no specific evidence was presented, the Tribunal concluded that the SCN issued after one year was time-barred and lacked merit.

4. Applicability of judgments:
The Tribunal relied on judgments such as M/s Nestle India Ltd. vs CCE Chandigarh and others to support its decision regarding the limitation period and the need for specific allegations backed by evidence. By considering these precedents, the Tribunal set aside the impugned order on grounds of limitation and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal's decision primarily revolved around the lack of specific allegations, tangible evidence, and the invocation of the extended period of limitation without proper justification. The judgment highlighted the importance of proving malafied activities and adhering to legal principles in confirming demands and imposing penalties.