2017 (12) TMI 1490 - AT - Central Excise

CENVAT credit - input services - canteen construction - sales commission - time limitation - Held that - the entire demand is barred by time as there is no mala fide intention on the part of the appellant to avail an irregular credit - Though the appellant has tried to justify the availment of credit on merit also, but once it is found that the entire demand is barred by time, then in that case, it is not required to go into the merit of the eligibility of the credit - appeal allowed.

Summary

Issues:
1. Appeal against the order passed by Commissioner(Appeals) partly allowing the appeal and dropping the penalty.
2. Availment of cenvat credit on service tax paid for canteen construction and sales commission.
3. Disallowance of credit on canteen construction and demand of interest and penalty.
4. Interpretation of the definition of "input services" under CENVAT Credit Rules, 2004.
5. Bar on time for the demand of irregularly availed credit.
6. Consideration of intention to evade payment of duty and suppression of facts.

Analysis:
1. The appeal was filed against the order of the Commissioner(Appeals) who partly allowed the appeal and dropped the penalty imposed on the appellant. The impugned order raised concerns regarding the availment of cenvat credit on service tax paid for canteen construction and sales commission.

2. The appellant, a manufacturer of sugar and molasses, availed cenvat credit on services related to canteen construction and sales commission. The dispute arose when it was found during an audit that the credit availed did not qualify as "input services." The lower authority disallowed the credit on canteen construction but allowed the credit on sales commission. The order-in-original demanded interest and imposed a penalty under Rule 15 of CENVAT Credit Rules, 2004.

3. The appellant argued that the services in question, including canteen construction and repair/maintenance work, were received before a specific date when the definition of "input services" covered services related to factory setup, modernization, renovation, or repair. The appellant cited various decisions to support their claim regarding the eligibility of the credit availed.

4. The appellant contended that the entire demand was time-barred as there was no intention to evade payment of duty, as acknowledged by the Commissioner(Appeals). Citing precedents, the appellant argued that the invocation of the extended period for demand was not sustainable in the absence of malafide intention.

5. The appellant emphasized that the credit availed was duly recorded in their books and returns, and was only detected during an audit. They argued that since there was no concealment from the department, the demand should be considered time-barred. The appellant supported this argument with relevant legal decisions.

6. After hearing both parties and examining the records, the tribunal found that the Commissioner(Appeals) had already established that there was no intention to suppress facts or evade duty. Consequently, the tribunal held that the entire demand was time-barred due to the absence of malafide intention on the part of the appellant. The tribunal relied on previous decisions to support its conclusion and allowed the appeal by setting aside the impugned order.