2017 (10) TMI 1105 - AT - Central Excise

Transfer of input service credit - utilisation of credit for payment of excise duty - extended period of limitation - Held that - It is seen that the proceedings has been initiated against the appellant on the basis of the audit conducted by the department and an objection raised by them, based upon the entries made in their statutory accounts. As such, it can be safely concluded that the appellant had reflected all the facts in their accounts - appellant had filed the returns disclosing the factual position to the Revenue. This reflects upon the bonafide of the appellant and even if there is some different view of the Revenue, the appellant cannot be saddled with any malafide, so as to justifiably invoke the longer period - extended period cannot be invoked - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Transfer of input service credit for payment of duty of excise.
2. Interpretation of the definition of Input Service.
3. Contestation on limitation period for raising demand.

Analysis:
1. The appellant, engaged in manufacturing Material Handling Equipments and providing taxable output services, transferred input service credit to their Excise Account for duty payment. The Revenue objected to this transfer, contending it was improper. The availed credit was for Telecommunication, Courier Charges, Advertisement Services, Man-power Supply Services, and Maintenance of Immovable Property Services.

2. The appellant argued that the services qualified as cenvatable input services for credit availment and duty payment. They emphasized the expression "in relation to business" in the definition of Input Service. The appellant asserted that since the head office and service providing unit were the same, credit was valid for both service tax on outgoing services and excise duty on manufactured goods.

3. The original authority and Commissioner (Appeals) upheld the demand, penalties, and interest. The appellant contested on merits and limitation. The Commissioner justified the longer limitation period due to the audit discovery of ineligible credit, despite the appellant's disclosure in Central Excise Returns. However, the appellant's accounts and returns demonstrated transparency, reflecting their bona fide intent. The Tribunal concluded that the demand, raised beyond the normal limitation period, was unjustified. The order was set aside on limitation grounds, without delving into the case merits, granting relief to the appellant.