2013 (7) TMI 566 - AT - Central Excise

Availment of input service credit Held that - Cenvat credit denied on the ground that repair and maintenance services obtained by the appellant for the cooler and refrigerator which are installed at the dealers premises cannot be held to be input services inasmuch as the same have no nexus with the manufacturing activities Decided against the assessee. Limitation - Appellant was making entries of the credit availed by them in their statutory records and filing proper returns also Held that - Appellants cannot be charged with any malafide for entertaining a view that he was entitled to input services credit, which was duly reflected in the statutory records Decided in favor of Assessee.

Summary

Issues:
1. Entitlement to input service credit for repair and maintenance of cooler and refrigerator provided to dealers for sale of final product.
2. Denial of Cenvat credit by the appellate authority.
3. Imposition of penalty under Rule 15(3).
4. Point of limitation in the appeal.

Analysis:

Issue 1: Entitlement to Input Service Credit
The main issue in this case revolved around whether the appellant would be entitled to input service credit for repair and maintenance of coolers and refrigerators provided to dealers for the sale of aerated water. The original adjudicating authority found that the coolers and refrigerators were not sold but provided by the appellant for keeping aerated water cool, and the appellant remained the owner. Consequently, the adjudicating authority vacated the show cause notice proposing denial of credit.

Issue 2: Denial of Cenvat Credit
The Revenue appealed the original adjudicating authority's decision, and the appellate authority reversed it, denying the Cenvat credit. The appellate authority held that repair and maintenance services for coolers and refrigerators installed at dealers' premises lacked nexus with manufacturing activities, thus disallowing the credit. Additionally, a penalty of Rs.10,000 was imposed under Rule 15(3).

Issue 3: Imposition of Penalty
The penalty was imposed based on the grounds that the repair and maintenance services obtained by the appellant did not qualify as input services due to the lack of nexus with manufacturing activities. The penalty was justified by the appellate authority in accordance with Rule 15(3).

Issue 4: Point of Limitation
The final judgment focused on the point of limitation. It was noted that the entire demand was time-barred, and the Commissioner (Appeals) did not dispute that the credit was duly reflected in the appellant's statutory records. The Commissioner, however, argued that the irregular credit was detected by the departmental audit party, alleging willful suppression of facts to evade duty. The Tribunal disagreed with this argument, emphasizing that the appellant maintained proper records and filed returns, and the original adjudicating authority's interpretation in favor of the appellant indicated differing views on the issue. Consequently, the Tribunal set aside the impugned order on the point of limitation, allowing the appeal with consequential relief to the appellant.