2013 (3) TMI 44 - AT - Central Excise

Inadmissible Cenvat Credit and Education Cess - SCN issued invoking extended period of limitation - confirmation of demand and equivalent penalty under Section 11AC - Held that - Admittedly 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 on mis-statement on their part. The respondent had availed cenvat credit on various input services on the bonafide belief that the same are admissible to them under the definition of inputs services contained in Rule 2(l) of Cenvat Credit Rules, 2004 and declared the quantum of cenvat credit in the ER I Returns. The respondent disputed the allegation of suppression and the same is neither admitted nor established. Once ER-I Return is filed, even though it is filed under self-assessment system, the officers are supposed to scrutinize the same. Just because the respondent had taken Cenvat credit in respect of certain input services, which according to the Department was not admissible to them, it cannot be concluded that the credit had been taken knowing very well that the same was not admissible, unless there is some evidence in this regard. Hence, the principle of law laid down in Neminath Fabrics Pvt. Ltd. case (2010 (4) TMI 631 - GUJARAT HIGH COURT), is not applicable to the facts of the present case - in favour of assessee.

Summary

Issues:
Determining whether the demand for recovery of cenvat credit availed on inadmissible input services is barred by limitation due to non-disclosure of details in monthly returns.

Analysis:
The appeal was filed by the Revenue against an Order-in-Appeal passed by the Commissioner(Appeals), Kolkata. The case involved the respondent availing cenvat credit on various input services during a specific period. The Revenue alleged inadmissible cenvat credit and Education Cess, invoking an extended period of limitation. The adjudicating authority confirmed the demand and imposed a penalty under Section 11AC of the Central Excise Act, 1944. The Commissioner (Appeals) allowed the appeal on the ground of limitation, leading to the Revenue's appeal.

The Revenue argued that non-disclosure of input service details in monthly returns amounted to suppression of facts, justifying the extended limitation period. They cited relevant judgments to support their position. Conversely, the Respondent contended that they disclosed the total cenvat credit availed in their returns, and no specific requirement existed to disclose input service details. They argued against suppression of facts or willful misstatement. They referenced judgments supporting their stance.

The Tribunal deliberated on whether the demand for recovery of cenvat credit was time-barred. It noted that the Respondent regularly filed ER-1 returns indicating total credit availed, allowing the Department to request specific details if needed. The Tribunal found no suppression on the Respondent's part, aligning with established legal principles. It cited precedents where disclosure in monthly returns was deemed sufficient, rejecting the Revenue's appeal.

The Tribunal differentiated the present case from previous judgments related to the time limit for recovery post-detection of suppression. It emphasized the Respondent's good faith belief in availing cenvat credit on input services. As suppression was neither admitted nor proven, the Tribunal upheld the Commissioner (Appeals) decision. Consequently, the Revenue's appeal was dismissed, affirming the lower court's order.