2019 (3) TMI 779 - AT - Central Excise

CENVAT Credit - suppression of facts or not - extended period of limitation - penalty - Held that - The Commissioner (A) has not considered the certificate of the Chartered Engineer which clearly certify the location and the function of switchyard - Further, in view of the various decisions relied upon by the appellant has been held that to decide the admissibility of the credit of any service, the use of service is important and not the location where the service is performed. The appeal is allowed on merits, the question of limitation is not considered - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of CENVAT credit of ?2,94,619/- for control and transmission of power at switchyard.

Analysis:
The appeal was filed against the Commissioner (A)'s order partially allowing the appellant's appeal but denying the CENVAT Credit of ?2,94,619/-. The appellant, a manufacturer of sugar and molasses, availed CENVAT credit under the CENVAT Credit Rules, 2004. The dispute arose from a show-cause notice issued based on audit observations, alleging that the appellant wrongly availed credit on certain input services not falling under the definition of input services. The Joint Commissioner allowed credit of ?21,98,691/- but disallowed ?5,95,505/-. The Commissioner (A) rejected the credit of ?2,94,619/- related to the switchyard's control and power transmission, citing unclear location details.

The appellant argued that the denial of credit for erection, commissioning, and installation of the switchyard was unjustified. They contended that the switchyard, installed within their factory premises, controlled and transmitted power for manufacturing machinery, requiring continuous uninterrupted power supply. The appellant provided invoices and a Chartered Engineer's certificate certifying the switchyard's location and function. They also argued that the audit report did not reveal any suppression of material facts to evade duty and challenged the limitation period and penalty imposition.

The learned AR supported the impugned order, but the Tribunal, after hearing both parties and examining the record, found that the Commissioner (A) rejected the credit solely based on the lack of switchyard location proof. The Tribunal noted the Chartered Engineer's certificate, which clarified the switchyard's location and function. Relying on precedent cases emphasizing service usage over location for credit admissibility, the Tribunal deemed the impugned order legally unsustainable. Consequently, the Tribunal allowed the appeal, setting aside the Commissioner (A)'s decision and providing consequential relief without delving into the limitation issue. The operative part of the order was pronounced on 11/03/2019.