2016 (8) TMI 628 - AT - Service Tax

Invokation of extended period of limitation - period involved is from July, 2005 to September, 2008 and show cause notice issued on 25.07.2011 - Cenvat credit - professional charges for engineering of plant, GTA services, credits based on photocopies and debit notes, etc. - During this period, the appellants are registered with the Department and were filing regular returns reflecting the various credits taken by them and the records maintained reflected all the transactions as is evident from the audit scrutiny much later - Held that - there is no allegation that the appellant has availed credit on any manipulated document or without payment of service tax. It is not tenable to contend that if the credit is taken on photocopies of the documents, extended period can automatically be invoked. As I find no detailed examination or finding by the lower authorities for invoking extended period, the demand is liable to be set aside on the ground of time bar alone. - Decided in favour of appellant

Summary

Issues: Time bar for demand of cenvat credit availed between July 2005 to September 2008.

Analysis:
1. The appellant contested the demand on the preliminary point of time bar, arguing that the show cause notice issued well beyond the normal period of demand as per Section 73 of the Finance Act, 1994.
2. The appellant maintained that all credits were availed as per records and statutory returns, with no suppression or fraud involved. The eligibility of credits was disputed by the audit, but they were taken correctly as per Cenvat Credit Rules, 2004.
3. The appellant's counsel highlighted that the dispute on interpretation should have been raised within the normal period, and there was no case for invoking suppression or fraud. The use of debit notes for credit was justified, and the absence of original documents should not lead to the conclusion of fraudulent credit availing.
4. The lower authorities reiterated the need for original documents for credit as per Rule 9 of Cenvat Credit Rules, 2004, and absence of such documents would result in a demand for credit recovery.
5. After hearing both sides and examining the records, the Tribunal found that the period in question was from July 2005 to September 2008, during which the appellant was registered with the Department and regularly filed returns reflecting the credits taken. The audit scrutiny later verified all transactions.
6. The Tribunal noted that the impugned order invoked the extended period based on the appellant availing credit on photocopies and debit notes, which are not specified documents. However, there was no detailed examination or finding by the lower authorities for invoking the extended period. As there was no allegation of manipulation or non-payment of tax, the demand was set aside on the grounds of time bar alone, and the appeal was allowed.