2018 (10) TMI 392 - AT - Central Excise

Extended period of limitation - no suppression of facts - interpretational issue - CENVAT Credit - input services received in the course of acquisition of land (for industrial use). Held that - There is no allegation of fraud, suppression, or falsification of records. The issue is simply of interpretation - the invocation of the extended period of limitation is bad and the Show Cause Notice is not maintainable on this ground. Appeal is on the issue of limitation.

Summary

Issues:
Appeal against order-in-original regarding Cenvat credit for input services in land acquisition for industrial use.

Analysis:
1. The appellant, a company setting up an aluminum smelter plant, appealed against the order-in-original challenging the denial of Cenvat credit for input services related to the acquisition of land and construction of a rehabilitation & resettlement colony. The appellant argued that the colony was essential for acquiring the land and operating the plant, serving both CSR and employee housing purposes.

2. The appellant had availed input services for setting up the plant, even though commercial production began later. The Department alleged inadmissible Cenvat credit and demanded recovery, including interest and penalty. The appellant reversed the credit but disputed the Department's claim, leading to the issuance of a Show Cause Notice proposing recovery of the credit amount along with interest and penalty.

3. The appellant contended that the Show Cause Notice was invalid due to the invocation of the extended period of limitation without any allegations of fraud or suppression. The appellant argued that the transactions were duly recorded, and no intention to evade duty was present. The appellant sought relief based on the limitation issue.

4. The Revenue argued that the appellant had initially reversed the Cenvat credit upon the Department's inquiry but later refused to pay interest, claiming the credit was rightfully taken. The impugned order upheld the Department's demand, emphasizing that the input services for the colony did not directly relate to manufacturing activities, leading to the reversal of wrongly availed credit.

5. The Tribunal analyzed the provisions of Rule 14 of the Cenvat Credit Rules, emphasizing the recovery of wrongly taken credit along with interest from the manufacturer. The Tribunal rejected the Revenue's reliance on certain court decisions to support the interest recovery, stating that the issue was a matter of interpretation rather than fraud or suppression.

6. After considering the arguments, the Tribunal found no evidence of fraud or suppression and concluded that the invocation of the extended period of limitation was unjustified. Consequently, the Tribunal allowed the appeal on the limitation issue, setting aside the impugned order and granting the appellant consequential benefits as per the law.