2016 (3) TMI 482 - AT - Central Excise

Admissibility of cenvat credit - denial of credit by observing that transmission towers, being permanently fixed/ embedded to earth and hence being immovable property, cannot be considered to be goods - Held that - Commissioner (Appeals) has set-aside the penalty on the ground that there was no allegation of suppression against the assessee and there was also no intention to evade duty, as the appellant being a Government Undertaking. It is not the Revenue s case that they have challenged the said part of impugned order of Commissioner (Appeals). As such, the findings of the appellate authority on the point of absence of malafide have attained finality. I agree with the ld. Advocate that in the case of absence of any intention to evade payment of duty, the extended period would not get invoked. Inasmuch as the demand in the present case stands raised by invoking the longer period of limitation, I find no justifiable reason to uphold the impugned order. However, as ld. DR has referred to the fact that part of the extended period may fall within the limitation period, remand the matter to the original adjudicating authority for examining the said aspect alongwith the appellant s plea that the credit was taken only in April 2010 and not subsequently. The appeal is disposed of in the above manner.

Summary

Issues:
Admissibility of cenvat credit for steel structural items used in transmission tower construction; Denial of cenvat credit by lower authorities; Imposition of penalty and its validity; Interpretational nature of the issue; Application of the extended period of limitation.

Admissibility of Cenvat Credit:
The dispute centered around the admissibility of cenvat credit amounting to Rs. 3,29,218 availed by the appellant for steel structural items used in constructing a transmission tower for a power facility. The lower authorities denied the credit, citing that transmission towers, being permanently fixed to the earth, were considered immovable property and not goods. The appellant argued that the steel items were used for fabricating capital goods and were thus admissible cenvatable items. The Commissioner (Appeals) set aside a part of the demand, allowing the credit for steel items used in fabrication while disallowing it for transmission towers.

Imposition of Penalty:
The Commissioner (Appeals) imposed a penalty of Rs. 9,79,204 under rule 15(2) of Cenvat Credit Rules, alleging suppression of facts with the intention to evade payment of Central Excise duty. However, the penalty was set aside as it was found that the appellant, a Government Undertaking, did not have any malafide intention to evade duty. The appellate authority highlighted that the issue was of an interpretational nature, citing legal precedents where penalties were not imposed for interpretational issues.

Extended Period of Limitation:
The appellant argued that the demand raised in 2011 for the period starting from April 2010 was barred by limitation due to the absence of malafide intention. The appellant contended that the extended period of limitation should not apply without malafide. The original adjudicating authority was directed to examine the aspect of limitation, considering the appellant's claim that the credit was taken only in April 2010 and not subsequently.

Conclusion:
The judgment partially allowed the appeal by permitting cenvat credit for certain steel items, setting aside the penalty, and remanding the matter to the original authority for further examination regarding the limitation period. The absence of malafide intention to evade duty played a crucial role in the decision, highlighting the importance of interpreting legal provisions accurately in tax matters.