2017 (5) TMI 1296 - AT - Central Excise

CENVAT credit - duty paying documents - Rule 9(1)(f) of CCR, 2004 - Held that - Rule 9(i)(f) deals with the document and accounts required for availing CENVAT credit, and this rule was not brought to the notice of the Tribunal - the benefit of discharging 25% of the penalty on fulfillment of necessary condition as laid down under the said provision is extended to the appellant - appeal allowed - decided partly in favor of appellant.

Summary

Issues: Appeal against Order-in-Appeal regarding admissibility of CENVAT credit on insurance services post 10.9.2004 and limitation period for demand.

Analysis:
1. Admissibility of CENVAT Credit on Insurance Services:
The appellant availed CENVAT credit on insurance services post 10.9.2004, arguing that since they continued to receive services after the said date, proportionate credit was justifiable. The appellant relied on a previous Tribunal judgment in G.H.C.L. Ltd. case. However, the Revenue contended that Rule 9(1)(f) of CENVAT Credit Rules, 2004 was not considered in the G.H.C.L. Ltd. case, making it non-binding. The Revenue cited Ester Industries Ltd. case, where it was held that credit contrary to Rule 9(1)(f) is inadmissible. The Tribunal agreed with the Revenue, upholding the disallowance of credit and extended the limitation period for demand.

2. Limitation Period for Demand:
The appellant argued that the demand issued in 2007 for credit availed in 2004 was time-barred. However, the Tribunal, considering Rule 9(1)(f) of CENVAT Credit Rules, 2004, found the appellant's interpretation unjustified. The Tribunal emphasized that the appellant's failure to inform the department of their credit availed constituted misrepresentation and suppression, justifying the extended limitation period. The Tribunal modified the penalty, allowing the appellant to pay 25% of the duty evaded as penalty within 30 days for final closure of the case, failing which the penalty would be restored to the original amount equal to the wrong credit taken.

In conclusion, the Tribunal upheld the disallowance of CENVAT credit on insurance services post 10.9.2004, citing Rule 9(1)(f) of CENVAT Credit Rules, 2004, and extended the limitation period for demand due to misrepresentation by the appellant. The appellant was granted the option to pay 25% of the duty evaded as penalty within 30 days for final closure of the case, subject to fulfilling the specified conditions.