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2018 (6) TMI 1413 - AT - Central ExciseCENVAT Credit - input services - capital goods - Marine Insurance services - Air Travel Agent s services - capital goods cleared without being used as such - extended period of limitation - Held that - This appeal can be disposed of only on the ground of limitation. SCN is issued on 17.05.2016 for the various transactions on availment of CENVAT credit during the period May, 2013 to March, 2015. It is undisputed that the appellants were regular in filing the monthly returns with the authorities. The Audit reports submitted by the Learned Counsel are for period January, 2013 to December, 2013 audited during the period 26.01.2014 and 28.01.2014 and audit reports for January, 2014 to December, 2014 audited on 06.01.2015 - 21.01.2015. The said audit reports did not indicate any of the allegations made in the present show cause notice. It is also seen from the said show cause notice dated 17.05.2016, the basis for issuance of show cause notice is the audit report of the CAG - It is settled law in the case of Commissioner of Central Excise, Bangalore Vs. MTR Foods Ltd., 2012 (10) TMI 165 - KARNATAKA HIGH COURT wherein, Hon ble High Court of Karnataka has specifically held that once returns were regularly filed and no objections raised about same in first audit by Revenue Officers and during second audit, objections raised about same, and the said returns indicated availment of CENVAT Credit Rules, the audit party accepted the same, and it is not proper to invoke the extended period. The impugned order is set aside only on the ground of limitation - appeal allowed - decided in favor of appellant.
Issues:
1. Eligibility to avail CENVAT credit of service tax paid on Marine Insurance services and Air Travel Agent's services. 2. Reversal of CENVAT credit availed on capital goods cleared without being used as such. 3. Invocation of extended period for the demand. Analysis: Issue 1: Eligibility for CENVAT credit The appellant availed CENVAT credit on Marine Insurance and Air Travel Agent's services for the period May 2013 to March 2015, along with Central Excise Duty paid on imported compressors in 2013. The dispute arose when a show cause notice demanded reversal of CENVAT credit on these services, alleging their ineligibility. The appellant contested the issue on merits and limitation. Both lower authorities upheld the demands, imposing penalties and interest. The appellant argued that Marine Insurance was for export goods and Air Travel Agent's services were for business travel. The appellant also claimed the demand was time-barred due to regular filing of returns and no objections raised during audits. Issue 2: Reversal of CENVAT credit on capital goods The demand for reversal of CENVAT credit on machinery removed without utilizing the credit was also contested by the appellant. The authorities did not agree with the appellant's contentions, leading to the confirmation of the demands. The appellant maintained that they had correctly reversed the credit while discharging duty on one of the machineries. The appellant argued that the demands were hit by limitation, citing the issuance of the show cause notice invoking the extended period on 17.05.2016. Issue 3: Invocation of extended period The crucial aspect of the judgment focused on the invocation of the extended period for the demand. The Tribunal noted that the show cause notice issued on 17.05.2016 covered transactions from May 2013 to March 2015. However, the appellant regularly filed monthly returns, and audit reports for the relevant periods did not raise any objections. Referring to legal precedents, the Tribunal emphasized that if returns were regularly filed without objections during audits, it was improper to invoke the extended period. Citing a relevant case law, the Tribunal ruled in favor of the appellant, setting aside the impugned order solely on the ground of limitation. In conclusion, the Tribunal allowed the appeal on the basis of limitation, emphasizing the importance of regular filing of returns and absence of objections during audits in determining the applicability of the extended period for demands related to CENVAT credit eligibility and reversal.
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