2019 (1) TMI 168 - AT - Central Excise

CENVAT Credit - input services - upto the place of removal - Forwarding and Cargo Handling services - Repair and Maintenance of ETP - Extended period of limitation - Held that - No doubt as per the purchase order issued by the customers, the property in the goods will transfer at the customers premises when the goods are delivered to the buyer - the place of removal is the port not the customers premises as claimed by the appellant and the Commissioner (A) has rightly held and demanded the service tax. Extended period of limitation - Held that - Since the appellant has not concealed any facts from the department with an intent to evade payment of duty and they have regularly filed the ER-1 returns disclosing the availment of credit and the demand was raised on the basis of audit objection - the extended period cannot be invoked - the demand is confirmed for the normal period of limitation of one year and the demand for the period June 2009 to May 2013 is barred by limitation. Denial of CENVAT credit on Repair and Maintenance - Held that - In view of the explanation given by the appellant that the said credit has been availed on reverse charge basis and they have shown the payment vide monthly challan produced on record, therefore, denial of CENVAT credit of ₹ 35,535/- is set aside. Demand of Interest - Held that - Since the appellants have proved that they have availed the credit but have not utilized the same and they had sufficient balance in their CENVAT account till the date of reversal of the wrongly availed credit, the appellants are not liable to pay interest and penalty. The case remanded back for proper computation of demand of CENVAT credit of service tax for the normal period and interest and penalties are set aside - appeal allowed in part and part matter on remand.

Summary

Issues involved:
- Denial of CENVAT credit under Section 11A of the Central Excise Act
- Imposition of interest under Section 11AB and penalties under Section 11AC
- Extended period of limitation for demand of CENVAT credit
- Denial of CENVAT credit on Repair and Maintenance services

Analysis:

Issue 1: Denial of CENVAT credit under Section 11A of the Central Excise Act
The appellants contested the denial of CENVAT credit on Forwarding and Cargo Handling services and Repair and Maintenance of ETP. They argued that the services were used directly or indirectly in the manufacturing process, making them eligible input services. The Commissioner (A) confirmed the demand only for irregular CENVAT credit in respect of Forwarding and Cargo Handling services and Repair and Maintenance of ETP. The appellants claimed that the services were used for export purposes, and the place of removal was the port of export, not the customers' premises. The Tribunal held that the place of removal for export goods was indeed the port of export, not the customers' premises, as claimed by the appellants. Therefore, the denial of CENVAT credit on these services was upheld.

Issue 2: Extended period of limitation for demand of CENVAT credit
In one of the appeals, the extended period of limitation was invoked for demanding CENVAT credit availed during a specific period. The appellant argued that they had not concealed any facts from the department with an intent to evade payment of duty, and they regularly filed returns disclosing credit availed. The Tribunal agreed that in such circumstances, where the demand was based on audit objections and the appellant had been transparent in their filings, the extended period of limitation could not be invoked. Therefore, the demand for the specific period was held to be barred by limitation.

Issue 3: Denial of CENVAT credit on Repair and Maintenance services
Regarding the denial of CENVAT credit on Repair and Maintenance of ETP, the appellant explained that they had paid service tax on a reverse charge basis, even though the invoices did not reflect the service tax amount. The Tribunal accepted this explanation and set aside the denial of CENVAT credit for Repair and Maintenance services.

Conclusion:
The Tribunal partially allowed the appeal by remanding the case for proper computation of demand for the normal period. The penalties imposed were set aside, as the extended period could not be invoked for subsequent periods. The denial of CENVAT credit for Repair and Maintenance services was overturned, and interest and penalties were waived due to the appellants' proof of non-utilization of wrongly availed credit. The appeals were disposed of accordingly.