2010 (11) TMI 835 - AT - Service Tax

Cenvat credit - Demand - warehousing and cargo handling services - Time limitation - it is clear that the criteria for invoking extended period of limitation under proviso to Section 11A(1) is identical to the criteria for imposition of penalty under Section 11AC - there is no dispute about the fact that the ER-I Returns had disclosed the availment of Cenvat Credit but since there is no requirement for enclosing the invoices or giving the details of such credit or neither such details were given nor the invoices were enclosed - Moreover when the quantum of service tax credit availed had been disclosed, the officers were always free to inquire from the respondent about details of the same and satisfy themselves about its correctness - Decided in favor of the assessee

Summary

Issues:
1. Availability of extended period under proviso to Section 11A(1) of Central Excise Act, 1944 for recovery of allegedly wrongly taken Cenvat credit.
2. Imposition of penalty on the respondent under Rule 15(4) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act.

Issue 1: Availability of Extended Period for Recovery of Cenvat Credit:
The case involved the Department appealing against the Commissioner (Appeals) order, challenging the time-barred nature of the show cause notice issued to recover allegedly wrongly taken Cenvat credit. The Department argued that the respondent had suppressed relevant information regarding the availed Service Tax Credit, indicating intent to evade duty payment. The Department invoked the extended period under proviso to Section 11A(1) of the Central Excise Act. The Department relied on previous tribunal decisions to support their contention. However, the respondent defended, emphasizing that there was no deliberate suppression of facts to avail wrong Cenvat credit, citing judgments of the Hon'ble Supreme Court. The Commissioner (Appeals) held that the demand was time-barred due to lack of evidence showing deliberate suppression. The Tribunal concurred, stating that the mere failure to disclose specific details did not imply fraudulent intent, dismissing the Revenue's appeal.

Issue 2: Imposition of Penalty on the Respondent:
The second issue pertained to the imposition of penalty on the respondent under Rule 15(4) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act. The rules stipulated penalties for fraud, collusion, wilful misstatement, or suppression of facts to evade duty payment. The Department argued that the respondent's non-disclosure of availed Service Tax Credit amounted to suppression, justifying the penalty. However, the respondent contended that they acted in good faith, believing they were entitled to the credit, and there was no evidence of deliberate misrepresentation. Citing Supreme Court judgments, the respondent highlighted the necessity of positive evidence for invoking penalties. The Tribunal agreed with the respondent, emphasizing that lack of detailed disclosure did not automatically imply fraudulent intent. As there was no evidence of deliberate suppression, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal and ruling against the imposition of penalties on the respondent.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, legal provisions invoked, and the Tribunal's decision on each issue, ensuring a comprehensive understanding of the case.