2016 (9) TMI 87 - AT - Central Excise

Imposition of penalty - appellant contend that it is purely a matter of interpretation - Cenvat Credit in respect of construction services for the construction of guest house, staff quarters, flooring work at colony, septic tank of security barracks, club house, bank building, hawankund shed, temple etc. - Held that - in this matter I observe that there are various contradictory judgments of Tribunals on the similar issue and Cenvat credit on services received in residential complex/colony is allowed in number of cases by Tribunal. It is purely a matter of interpretation of statute and hence no penalty is imposable in the instant case. Invokation of extended period of limitation - Demand - Cenvat credit - construction services for the construction of guest house, staff quarters, flooring work at colony, septic tank of security barracks, club house, bank building, hawankund shed, temple etc. - relation to manufacture of final product - Held that - it is found that during the relevant period the appellant have been regularly submitting all the cenvatable invoices along with their monthly ER-1 return, as evident from the covering letter of monthly ER-1 return. The Ld. Commissioner (Appeals) admitted that on the issue of Cenvat Credit on construction services, there were contradictory judgments and the issue involved is purely the matter of interpretation of statute. This finding of the Ld. Commissioner has not been challenged by the Revenue, therefore it attained finality. With this finding also suppression of fact cannot be alleged on the appellant. For this reason also the extended period of demand could not have been invoked. Therefore, in the present case, for the demand of period July 2005 to January 2008, the show cause notice was issue on 8.12.2009 is clearly time bar. Since the entire demand is not sustainable on the ground of time bar itself, I do not feel necessary to deal with merit of the issue on admissibility of Cenvat Credit. Hence the impugned order is set aside. - Decided in favour of appellant

Summary

Issues involved:
1. Availment of Cenvat Credit for construction services related to various buildings within the factory premises.
2. Allegation of suppression of fact leading to the imposition of penalty and recovery of interest.
3. Contradictory judgments regarding the interpretation of statute in relation to Cenvat Credit on construction services.
4. Invocation of extended period of demand based on alleged suppression of fact by the appellant.

Issue 1: Availment of Cenvat Credit for construction services:
The appellant availed Cenvat Credit for construction services related to the construction of guest house, staff quarters, flooring work at colony, septic tank of security barracks, club house, bank building, hawankund shed, temple, etc., within the factory premises. The dispute arose when a show cause notice was issued proposing disallowance of the Cenvat Credit on the grounds that these services were not directly related to the manufacture of the final product. The lower authorities confirmed the demand of Cenvat Credit, penalty, and interest. The appellant contended that all these constructions were directly or indirectly related to factory activities, making them eligible for credit. Various judgments were cited in support of this argument.

Issue 2: Allegation of suppression of fact and penalty imposition:
The Revenue alleged suppression of fact on the part of the appellant regarding the use of construction services, leading to the invocation of the extended period for demand. The lower authorities held that there was indeed suppression of fact, justifying the penalty and interest imposition. However, the appellant argued that all relevant details were regularly submitted to the department along with monthly returns, refuting the claim of suppression. The Ld. Commissioner (Appeals) acknowledged contradictory judgments on the issue of Cenvat Credit and penalty imposition, ultimately dropping the penalty due to the interpretational nature of the matter.

Issue 3: Contradictory judgments and interpretation of statute:
The case involved contradictory judgments on the admissibility of Cenvat Credit on construction services, highlighting the interpretational complexity of the statute. The appellant cited various Tribunal decisions supporting their claim for credit based on the construction services being related to factory activities. The Ld. Commissioner (Appeals) also recognized the conflicting judgments and the interpretational nature of the issue, leading to the waiver of the penalty. This aspect of the case emphasized the legal complexities surrounding the interpretation of statutes in tax matters.

Issue 4: Invocation of extended period based on suppression of fact:
The Revenue justified the invocation of the extended period for demand due to alleged suppression of fact by the appellant regarding the use of construction services. However, the appellant demonstrated that all necessary details were regularly submitted to the department, challenging the claim of suppression. The Ld. Commissioner (Appeals) found in favor of the appellant, citing the regular submission of invoices and the interpretational nature of the issue as reasons for dropping the penalty and interest imposition. The final judgment set aside the impugned order, ruling the demand as time-barred and not sustainable.

This detailed analysis of the judgment showcases the intricate legal arguments, conflicting interpretations, and the significance of factual submissions in tax matters, ultimately leading to the decision in favor of the appellant based on the time-barred nature of the demand.