2015 (8) TMI 390 - AT - Central Excise

Clandestine removal of goods - Availment of inadmissible CENVAT Credit - Held that - Goods have been cleared on the strength of 38 gate passes clandestinely without payment of duty. Obviously these goods were not to be recorded in the receipt units that they have received the goods without recovery of invoices in their unit. Therefore these arguments have no force. Further I find that it is admitted by the Managing Director as well as other officials that they have cleared goods on the strength of 38 gate passes to their other units. It means that gate passes are meant for their internal movement of goods as appellant have not supplied for any other movement in their factory is covered by gate passes and no gate pass has been produced by the appellant for verification. In these circumstances the claim of appellant is not sustainable. - Decided against the assessee. For denial of input service Credit on construction services of residential colony I find that there are divergent views of two High Courts i.e. the Hon ble High Court of Bombay and High Court of Andhra Pradesh. Therefore there is no decision of jurisdictional High Court available before me. Therefore I am examining issue independently. As residential colony have no nexus with the manufacturing activity of the appellant. Therefore I hold appellant is not entitled to avail input service credit on construction services of residential colony - Decided against the assessee. Extended period of limitation - Levy of penalty - Held that - For imposition of penalty on wrong availment of input service credit on the- services I hold that issue was in dispute. Therefore, penalty is not imposable on the appellant - Following the precedent decision in the case of Orissa Bridge & Construction Corpn. Ltd. (2008 (8) TMI 585 - SUPREME COURT OF INDIA) I hold that facts of this case are similar to the facts of the said case and that extended period of limitation is not invokable - Decided partly in favour of assessee.

Summary

Issues:
1. Liability to pay duty on clearance based on gate passes
2. Imposition of penalty for wrongful Cenvat Credit on steel items
3. Entitlement to Cenvat Credit on construction services for labor colony
4. Limitation period for the demand

Analysis:

Issue 1:
The appellant contested the duty payment on 38 gate passes, claiming they were for internal use only. However, officials admitted to clearing goods using these passes clandestinely. The tribunal found the appellant's argument unsubstantiated, as goods were not recorded in receiving units without invoices, indicating clandestine clearance. The tribunal upheld the duty payment based on admissions by the managing director and officials.

Issue 2:
Regarding penalty for wrongful Cenvat Credit on steel items, the appellant reversed the credit with interest, indicating a dispute over entitlement. The tribunal held that as the issue was in dispute, penalty imposition was deemed inappropriate, ruling in favor of the appellant.

Issue 3:
On the entitlement to Cenvat Credit for construction services of a labor colony, conflicting views from High Courts were noted. In the absence of a jurisdictional High Court decision, the tribunal independently analyzed the issue. It concluded that as the residential colony had no nexus with the manufacturing activity, the appellant was not entitled to avail input service credit on construction services for the labor colony.

Issue 4:
Regarding the limitation period for the demand, the tribunal referred to a precedent where the extended period of limitation was deemed unjustified by the Apex Court. Following this precedent, the tribunal held that the extended limitation period was not applicable in this case, aligning with the decision in the Orissa Bridge & Construction Corpn. Ltd. case.

In conclusion, the tribunal disposed of the appeals based on the above analysis, providing relief accordingly.