2018 (9) TMI 1834 - HC - Central Excise

CENVAT Credit - input services - Credit of Goods Transport Agency services for outward transportation of goods beyond the place of removal is eligible within the meaning of input service as defined under CCR, 2004 - Time Limitation - Tribunal allow the credit - HELD THAT - In view of the amended definition of input service w.e.f. 01.03.2008 as also in the light of judgment of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT , judgment of the Tribunal cannot be sustained in law and the demand is liable to be revived. However, considering the totality of circumstances, entire matter deserves to be remanded back to the Tribunal to consider not only the question of penalty and limitation but also the original demand as the decision on the question of limitation may have the effect of diluting the same to some extent. Appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of the definition of "input service" under CENVAT Credit Rules, 2004.
2. Consideration of limitation in the assessment of CENVAT credit.
3. Application of penalty in case of revival of original demand.

Interpretation of "input service" definition:
The appellant-revenue challenged the Tribunal's judgment allowing CENVAT credit for outward transportation of goods beyond the place of removal. The appellant argued that the definition of "input service" was amended in 2008, making transportation service up to the place of removal eligible. Reference was made to the Supreme Court judgment in a similar case. The respondent-assessee contended that the matter was previously decided in their favor and limitation applied to the demand period. The High Court found the Tribunal's judgment unsustainable post the 2008 amendment and Supreme Court ruling, remanding the matter back for consideration of penalty, limitation, and original demand.

Consideration of limitation:
The respondent argued that the demand period was hit by limitation, as the notice was issued late. They contended that penalty should not apply due to the Tribunal's previous decisions in their favor. The appellant insisted on penalty imposition based on the Supreme Court judgment's applicability. The High Court acknowledged the limitation issue but decided to remand the case back for a comprehensive review by the Tribunal, considering penalty and limitation for re-quantifying the demand.

Application of penalty in case of revival of original demand:
The appellant sought penalty imposition if the original demand was revived, citing Supreme Court precedents. The respondent opposed penalty, citing the Tribunal's previous decisions and the prevailing law during the assessment. The High Court did not express any opinion on penalty but directed the Tribunal to consider penalty, limitation, and original demand afresh, without deciding on the merits at this stage.