2016 (8) TMI 617 - AT - Central Excise

Invokation of extended period of limitation - Cenvat credit - Service tax paid for repair and maintenance of tailing dam road at the mines area - appellant have created tailing dam facility for proper disposal of hazardous waste known as Tailing - Held that - the credit availed by the appellants were recorded in their accounts and are reflected in their statutory returns. This particular credit not separately shown in their returns could not be the reason for invoking suppression as there is no provision to show individual credits in the returns filed with the Department. Further, the bonafide belief of the appellant to the effect that the repair work of the said road is connected to the overall mandatory requirement of the waste disposal, which is eligible for credit, cannot be discounted. As admitted, the credit entries were in the regular records, which were audited and the dispute arose thereafter only. Therefore, invoking extended period with an allegation of suppression of facts and willful mis-statement with an intend to evade payment of duty is not sustainable. - Decided in favour of assessee

Summary

Issues: Denial of cenvat credit for service tax paid on repair and maintenance of tailing dam road; Time bar for invoking extended period.

Denial of Cenvat Credit:
The case involved the denial of cenvat credit amounting to &8377;31,889/- for service tax paid on the repair and maintenance of a tailing dam road at the mines area. The appellant, engaged in manufacturing zinc and other products, created a tailing dam for proper disposal of hazardous waste. The road repair was undertaken to facilitate the transportation of waste to the tailing dam. The Revenue contended that there was no nexus between the repair activity and the taxable activity of manufacturing. The Original Authority and the impugned order upheld the denial of credit. The appellant argued that the road repair was essential for proper waste disposal and contested the demand on the ground of time bar. The appellant maintained all credit records and believed the credit was eligible. The Tribunal found that the repair work was connected to the mandatory waste disposal requirement and the credit entries were in the regular records, audited before the dispute arose. The denial based on lack of nexus was overturned, and the impugned order was set aside.

Time Bar for Invoking Extended Period:
The question of time bar was raised regarding the denial of cenvat credit. The appellant availed the credit in November 2009, and a notice objecting to it was issued on 22 December 2011. The appellant argued that the demand was time-barred as they maintained all credit records and disclosed the credits in their statutory returns. The Revenue claimed that the irregular credit was noticed during an audit, justifying the invocation of the extended period. The Tribunal found that the denial based on time bar was unsustainable, as there was no suppression of facts or willful misstatement to evade duty payment. The appeal was allowed on the grounds of time bar, setting aside the impugned order.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the cenvat credit for the repair and maintenance of the tailing dam road and rejecting the invocation of the extended period based on suppression of facts. The judgment emphasized the essential nature of the road repair for waste disposal and the appellant's bonafide belief in the eligibility of the credit, ultimately overturning the denial based on lack of nexus and time bar issues.