2019 (9) TMI 220 - AT - Central Excise

CENVAT Credit - Construction Services - input services - Professional Consultancy Service on Real Estate - Topography Survey Service - Cleaning and Leveling service - Suppression of facts or not - extended period of limitation - HELD THAT - The impugned services have not been used for the purpose of carrying out construction - Further, the exclusion clause in Rule 2(l) of Input Service is very clear and in the exclusion clause only construction services have been excluded and not the services in preparation of construction of building - Further, the exclusion clause in Rule 2(l)(A) of CENVAT Credit Rules, 2004 excludes those services falling under Section 66E(b) / 66E(h) of the Finance Act, 1994 and the impugned services availed by the appellant do not fall under the exclusion clause. Further, the impugned services fall within the definition of input service because the expression in the manufacture or in relation to manufacture or includes employed in Rule 2(l) of the CENVAT Credit Rules, 2004 connotes very wide scope as held by the Supreme Court in the case of Ramala Sahkari Chini Mills Ltd. vs. CCE 2016 (2) TMI 902 - SUPREME COURT - the impugned services in the present case fall in the definition of input service and the appellant is eligible to take the CENVAT Credit of the same. Extended period of limitation - HELD THAT - The appellants have been regularly filing ST-3 returns and has been showing the credit taken by them and the Department has not raised any objection and it is only during the audit that the audit party has raised the said objection and thereafter, show-cause notice was issued by invoking the extended period of limitation, which in the present case is not justified because the department has failed to bring on record any material for suppression of facts with intent to evade payment of duty, therefore, show-cause notice is also wholly barred by limitation. Appeal allowed on merits as well as on limitation.

Summary

Issues:
- Eligibility of CENVAT credit on input services
- Interpretation of exclusion clause in Rule 2(l) of CENVAT Credit Rules, 2004
- Validity of show-cause notice issued beyond the limitation period

Eligibility of CENVAT credit on input services:
The case involved the manufacture of Spray Nozzles and payment of Central Excise duty. The audit revealed an alleged ineligible CENVAT credit of ?9,94,146 on input services related to Professional Consultancy Service, Topography Survey Service, and Cleaning and Leveling service. The Department claimed the appellant willfully suppressed facts to use the credit for duty payment. The adjudicating authority confirmed the demand, and the appeal was rejected by the Commissioner (A).

Interpretation of exclusion clause in Rule 2(l) of CENVAT Credit Rules, 2004:
The appellant argued that the impugned order misinterpreted the definition of 'input service' in Rule 2(l). They contended that the exclusion clause (A) was not applicable, and the show-cause notice based on audit objections was against the tax assessment scheme. The appellant maintained that the services were for new factory land purchase, not construction. They cited legal precedents to support their position.

Validity of show-cause notice issued beyond the limitation period:
The appellant claimed the demand was time-barred as the notice was issued in 2017 for the period of 2013-2014. They argued no suppression of facts occurred, as evidenced by regular return filings. The AR supported the impugned order findings. The Tribunal held that the impugned services did not fall under the exclusion clause and were eligible as input services. The extended limitation period invocation was deemed unjustified due to lack of evidence of fact suppression, leading to setting aside of the order and allowing the appeal on merit and limitation grounds.