2019 (6) TMI 562 - AT - Central Excise

CENVAT credit - duty paying documents - non-submission of the relevant documents to be eligible for availment of credit under Rule 9(2) of the CENVAT Credit Rules - credit denied to the appellant on the ground that the invoices are addressed to their Yeshwanthpur unit whereas the services were availed at Doddaballapur unit - credit also denied on the ground that the appellant have not produced the documentary evidence to show that the services were actually availed at Doddaballapur unit - Time Limitation. HELD THAT - Perusal of various invoices produced by the appellant clearly shows that in some invoices the name of both the units i.e. Yeshwanthpur as well as Doddaballapur are mentioned but in some invoices only the name of Yeshwanthpur unit is mentioned. As per the appellant s case, these services have been used at Doddaballapur unit because the said unit came into operation in 2008 and these input services were used for the said unit after it came into operation. Further as per RG-1 register of Yeshwanthpur factory, the operation was stopped from January 2010 onwards and there was no production and clearance of the goods from the said factory. Further, the invoices produced on record pertain to the services which were availed after the closure of Yeshwanthpur factory which clearly shows that those services were availed by Doddaballapur unit. Further, it is not the case of the Department that appellant have availed the CENVAT credit at both the places and the mentioning of the address of Yeshwanthpur factory on some of the invoices is only procedural lapse for which the CENVAT credit cannot be denied to the appellant. Time Limitation - HELD THAT - The entire demand is barred by limitation because the extended period has been invoked merely on the ground that irregular credit was detected during audit otherwise it would have gone unnoticed. Whereas the appellant has been filing the returns regularly for Doddaballapur unit and has been showing the credit availed. Appellant has also produced the copies of the returns filed by him from Doddaballapur factory under the Service Tax Rules which clearly indicate the availment of credit on the disputed invoices. In view of this, it cannot be said that the appellant has suppressed the material fact with intent to evade payment of tax - Extended period cannot be invoked. Appeal allowed on merits as well as on limitation - decided in favor of appellant.

Summary

Issues:
Appeal against Commissioner's order partially allowing demand, credit denial for input services, limitation period for demand.

Analysis:
The appeal was filed against the Commissioner's order partially allowing the demand while confirming a significant amount along with penalty and interest. The case involved the denial of CENVAT credit for input services availed by the appellant. The appellant, a manufacturer of corrugated boxes, had shifted operations from Yeshwanthpur to Doddaballapur unit. The dispute arose when the appellant claimed credit based on invoices addressed to the Yeshwanthpur unit, but the services were utilized at the Doddaballapur unit. The Commissioner rejected the appeal due to lack of documents proving the shift and utilization of services at the new unit. The Tribunal remanded the case for reconsideration. The appellant argued that despite informing service providers about the shift, some continued to address invoices to the old unit. The appellant presented invoices indicating services for the Doddaballapur unit post-closure of Yeshwanthpur unit, supporting their claim. The appellant contended that the denial of credit was a procedural lapse and not due to misuse of credit at two locations. The appellant also argued that the demand was time-barred, as the notice was issued beyond the limitation period.

Upon review, the tribunal found that the denial of credit was primarily based on invoices addressed to the old unit, despite services being utilized at the new unit. However, invoices post-closure of the old unit clearly indicated services for the new unit. The tribunal noted that there was no evidence of credit misuse at multiple locations. The tribunal also observed that the demand was time-barred, as the irregular credit was detected during an audit, and the appellant had regularly filed returns for the new unit, indicating proper credit availing. Consequently, the tribunal held that the denial of credit and the demand were unsustainable in law. The appeal was allowed, setting aside the Commissioner's order.

In conclusion, the tribunal's decision favored the appellant, emphasizing the proper utilization of services at the new unit, absence of credit misuse, and the demand being beyond the limitation period. The judgment highlighted the importance of supporting documentation, timely filing of returns, and the procedural aspects of credit availment in tax matters.