2017 (1) TMI 840 - AT - Central Excise

Disallowance of CENVAT credit - various input services - capital goods - Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 - extended period of limitation - Held that - All input services received are held as eligible for credit except Services totaling ₹ 35,516/- disallowed on services of Services of peon at H.O. Services utilized for a ppty. Of Mr. Daga at Kolkata, Rent-a-cab services, Payment to sea court in Jaypee Green and Loading/ unloading of trading goods. As regards the disallowance of Cenvat credit paid by the appellant-assessee, on the basis of challans (for work done by them by their petty contractors), it is explained that such petty contractors were not well educated not well versed with service tax, hence they assisted them in depositing the service tax and the same was duly reflected in the bills, which amount was duly accounted for. I hold that the appellant-assessee is entitled to take Cenvat credit as the payment of such tax is supported both by the invoices as well as the challans, which are in procession of the appellant. Credit allowed in most of the services except four services mentioned - penalty set aside - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
- Disallowance of Cenvat credit availed by the appellant
- Validity of disallowance of Cenvat credit on photocopies of courier B/E
- Disallowance of Cenvat credit on input services availed during a specific period
- Disallowance of Cenvat credit taken on the strength of Challan for deposit of service tax
- Adjudication of Show Cause Notice invoking extended period of limitation
- Appeal against the order of the Additional Commissioner

Analysis:
The appeal pertains to M/s Orient Limited challenging the disallowance of Cenvat credit amounting to Rs. 19,52,518/- for the period from 01/12/2010 to 30/11/2012. The disallowance included various components such as credit on photocopies of courier B/E, input services, and Challan for service tax deposit. The Show Cause Notice was issued invoking the extended period of limitation based on alleged violations of Cenvat Credit Rules and Central Excise Act. The Additional Commissioner confirmed the demand and penalty, leading to the appeal before the Commissioner (Appeals) and subsequently before the Tribunal.

The Tribunal, after hearing both parties, analyzed the disallowances in detail. It found that the Cenvat credit on photocopies of courier B/E was allowable based on a precedent ruling. Regarding the disallowance of Cenvat credit on input services, the Tribunal examined each service category individually. It held that most services were essential for manufacturing activities and thus eligible for credit, except for a few services totaling Rs. 35,516/-. The Tribunal also addressed the disallowance of Cenvat credit based on Challans for service tax deposit, ruling in favor of the appellant as the tax payments were duly supported by invoices and challans.

In conclusion, the Tribunal allowed the appeal in part, permitting Cenvat credit for most input services except for specific categories. The appellant was granted consequential benefits in accordance with the law. Additionally, the penalty imposed was deleted under all sections. The judgment provided a detailed analysis of each issue raised, ensuring a fair and comprehensive decision based on the legal provisions and factual circumstances presented during the proceedings.