2015 (10) TMI 2344 - AT - Central Excise

Admissibility of CENVAT Credit - Invocation of extended period of limitation - Capital goods - Demand of Secondary and Higher Education Cess - Held that - Issue was settled by the Larger Bench in the case of Vandana Global Ltd (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ) in the year 2010. When an issue was disputable, then no intention to evade payment of duty or taking of wrong CENVAT Credit can be attributed on the part of the Appellant. Accordingly, 5 years extended period under Section 11A Proviso cannot be invoked. The demand period is from May 2009 to May 2010, whereas the Show Cause Notice was issued on 11.08.2011, which is clearly beyond the normal limitation period of 1 year and is required to be set aside. Accordingly, no penalties are imposable by the Appellant. So far as the admissibility of payment of Secondary and Higher Education Cess from the CENVAT Credit balance of Education Cess is concerned, it is observed from the First Proviso to Rule 3(7)(b) of CENVAT Credit Rules, 2004 that credit of Education Cess on excisable goods and Education Cess on taxable services, can be utilized only for payment of Education Cess on finished excisable goods or payment of Education Cess on taxable service. Accordingly, the stand of the Appellant that there is no bar on utilization of Education Cess credit balance for discharging Secondary and Higher Education Cess, is not correct. The same is required to be paid by the Appellant, with the liberty of taking equivalent amount of credit in the account of Education Cess. - Decided partly in favour of assessee.

Summary

Issues:
1. Admissibility of CENVAT Credit on specific items like M.S. Bars, Angles, Channels, Plates, etc.
2. Admissibility of CENVAT Credit on Consultancy Services availed.
3. Utilization of CENVAT Credit balance of Education Cess for payment of Secondary and Higher Education Cess.

Admissibility of CENVAT Credit on specific items:
The Appellant contested the denial of CENVAT Credit on items like M.S. Bars, Angles, Channels, Plates, etc., used in support structures for capital goods. The Appellant argued that the demand was time-barred as settled by the Larger Bench in a specific case. The Show Cause Notice issued beyond the normal limitation period of one year was deemed invalid. The Tribunal agreed, stating that conflicting decisions on these items were resolved by the Larger Bench in 2010. As the issue was disputable, no intent to evade duty was found, and the extended period under Section 11A Proviso couldn't be invoked.

Admissibility of CENVAT Credit on Consultancy Services:
Regarding Consultancy Services, the Appellant claimed CENVAT Credit for services availed, with a portion disallowed due to services provided to a second unit and trading activities. The Tribunal noted that before an amendment in 2012, there was no restriction on credit distribution. The Appellant was legally entitled to take the entire credit in one unit before the amendment. Citing a High Court case, the Tribunal upheld the Appellant's right to claim the credit, dismissing the Revenue's arguments.

Utilization of CENVAT Credit balance of Education Cess:
The Revenue argued against debiting the Education Cess balance for Secondary and Higher Education Cess payment, citing Rule provisions. The Tribunal found that Education Cess credit could only be used for specific purposes, requiring the Appellant to pay the Secondary and Higher Education Cess separately. The Appellant could take an equivalent credit in the Education Cess account. The Tribunal did not address the interest on the excess credit taken as it was not raised in the appeal. Ultimately, the appeals by the Appellants were allowed based on the detailed analysis and legal interpretations provided.

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