2011 (8) TMI 417 - AT - Service Tax

Imposing any penalty - Extended period of limitation - the credit availed by the assessee was reflected in the monthly returns - If there is no column in the monthly return to show the nature of service on which the credit was availed the assessee cannot be blamed for not disclosing the said fact - For invoking the longer period of limitation there has to be a suppression or mis-statement with an intent to evade payment of duty - When the respondents have reflected the amount of credit availed by them in their monthly returns it cannot be said that there was any positive act of suppression of mis-statement on their part - As such we are of the view that Commissioner (Appeals) has rightly held a part of the demands as barred by limitation - Decided in favour of assessee.

Issues:
1. Denial of Cenvat credit of service tax and education cess on outward transportation of excisable goods.
2. Imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004.
3. Bar on show cause notices due to limitation period.
4. Allegations of suppression and intent to avail wrongful credit.
5. Invocation of longer period of limitation.
6. Mens rea and imposition of penalty.
7. Appeal against Commissioner (Appeals) order.

Analysis:

1. The appeals before the Appellate Tribunal CESTAT, NEW DELHI involved the denial of Cenvat credit of service tax and education cess on outward transportation of excisable goods. The original adjudicating authority confirmed the demand by denying the Cenvat credit, but did not impose any penalty citing lack of mens rea.

2. The issue of imposing a penalty under Rule 15 of Cenvat Credit Rules, 2004 was raised. The Tribunal noted that the imposition of penalty was deemed unnecessary as the matter pertained to the interpretation of the law without any mens rea involved.

3. The Commissioner (Appeals) observed that the show cause notices were barred by limitation as they were issued beyond the normal period. He directed the lower authorities to requantify the ineligible credit falling within the limitation period, thereby allowing the appeal on the point of limitation.

4. Allegations of suppression and intent to avail wrongful credit were raised by the Revenue, contending that the respondents did not specify the services on which the credit was availed in their monthly ER returns. However, the Tribunal found no merit in this contention as the credit availed was reflected in the monthly returns, and there was no positive act of suppression or misstatement.

5. The invocation of the longer period of limitation was a crucial point of contention. The Tribunal emphasized that for the longer period to be invoked, there must be suppression or misstatement with an intent to evade payment of duty. Since the respondents had disclosed the credit availed in their monthly returns, the longer period was not applicable.

6. The issue of mens rea and imposition of penalty was addressed, with the original adjudicating authority concluding that there was no mens rea on the part of the respondents. This led to the Tribunal questioning the invocation of the longer period of limitation against the appellants.

7. Ultimately, the Tribunal found no merit in the Revenue's appeal and rejected the same, upholding the Commissioner (Appeals) order on the limitation period and lack of suppression or misstatement by the respondents.

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