2018 (9) TMI 127 - AT - Central Excise

CENVAT Credit - input service - Outward Courier Service - place of removal - Time Limitation - Held that - Tribunal in the case of Hero Motocorp Ltd. 2014 (8) TMI 364 - CESTAT NEW DELHI has held that in case of MRP clearance of the product as per Section 4A of the Central Excise Act, place of removal would be the factory gate and the credit of service tax paid on courier service beyond the factory gate is not available under Rule 3 of the Cenvat Credit Rules - there is no infirmity in the impugned order - CENVAT credit not allowed. Time limitation - Held that - The appellant has taken the cenvat credit in respect of input services in question on the bonafide belief that they are entitled for credit and the said bonafide belief was founded on the basis of various judicial decisions of the High Court and the Tribunal - Further, the entire issue relates to interpretation of statutory provisions particularly the input service definition in Rule 2(l) of the Cenvat Credit Rules 2004 - In the present case, the period of dispute is from 2009-10 up to 2011-12 and the show-cause notice was issued on 04.03.2014 which is beyond the normal time period of one year from the relevant date i.e. 10.04.2012 - entire demand is barred by limitation. The appellant is not entitled to the cenvat credit on courier service whereas on limitation he succeeds - the entire demand is barred by limitation - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Availment of cenvat credit on outward courier service
- Interpretation of "input service" under Cenvat Credit Rules, 2004
- Application of "place of removal" in the context of MRP valuation under Section 4A of Central Excise Act
- Invocation of extended period of limitation for demand of duty

Analysis:

Issue 1: Availment of cenvat credit on outward courier service
The appellant, engaged in manufacturing motor vehicles, dispatched parts through courier to dealers and availed cenvat credit on outward courier bills. The dispute arose regarding the eligibility of this credit under Rule 2(l) of Cenvat Credit Rules. The department issued a Show-Cause Notice demanding recovery of the credit, leading to the appeal.

Issue 2: Interpretation of "input service" under Cenvat Credit Rules, 2004
The appellant argued that the impugned order incorrectly interpreted the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules. They contended that the cost of courier transportation was included in the cost of auto-parts subject to Central Excise duty under MRP valuation. The appellant relied on judicial decisions to support their claim of entitlement to the credit.

Issue 3: Application of "place of removal" in the context of MRP valuation under Section 4A
The Commissioner (Appeals) held that the factory gate constituted the place of removal, thereby disallowing the cenvat credit on courier service beyond the factory gate. The appellant argued against this interpretation, emphasizing the unique legal premise of RSP/MRP-based valuation under Section 4A and the inapplicability of certain provisions under Section 4 to Section 4A.

Issue 4: Invocation of extended period of limitation for demand of duty
The department invoked the extended period of limitation, alleging suppression of material facts by the appellant. However, the appellant contended that the demand was time-barred, citing the Division Bench decision in the case of Hero Motocorp Ltd. The Tribunal's decision emphasized that demands could not be made beyond the normal time period if the issue involved statutory interpretation and was not free from doubt.

In conclusion, the appellate authority allowed the appeal, holding that the demand was barred by limitation based on the Tribunal's decision. The judgment highlighted the importance of statutory interpretation, the unique aspects of MRP valuation, and the limitations on invoking the extended period for demand of duty.