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2020 (1) TMI 940 - AT - Central ExciseCENVAT credit - input services - outward transportation of finished goods from the factory to the buyer s/customer premises - place of removal - scope of SCN - principles of natural justice - HELD THAT - The Notice proceeds on the basis that the alleged irregular credit of ₹ 32,86,580/- pertains entirely in respect of service tax paid on outward transportation of finished goods from the factory to the buyer s premises. However, the OIA has accepted that the Cenvat credit involved on this score is confined to ₹ 3,26,055/- only and that rest of the disputed credit relates to four other issues. The break-up of the disputed credit involved in each of these issues are duly supported by a certificate dated 7 February 2018 from an independent Chartered Accountant and the same has not been disputed in the OIA - Therefore, there is considerable force in the contention of the Appellant that the denial of credit in respect of the other four issues was clearly beyond the scope of the Notice, which lays the foundation for any proceeding and an altogether new case could not have been made out at the appellate stage being violative of the principles of natural justice. Cenvat credit of service tax paid on outward transportation from the factory to the buyer s premises - HELD THAT - The issue involved is clearly an interpretational one and the Board Circular dated 8 June 2018 also acknowledges the same - The period involved in the present proceeding is also prior to the contrary interpretation rendered in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT denying such credit - credit is allowed. Extended period of limitation - penalty - HELD THAT - It cannot be said that the department was not aware of the factum of the Appellant taking Cenvat credit of service tax on outward transportation of finished goods to buyer s premises having served a Notice dated 25 June 2008 for the prior period. Therefore, the extended period is clearly not available to the revenue - Consequently, invocation of the extended period and the imposition of penalty under Section 11AC is set aside - The demand on this aspect has to be confined to the normal period of limitation alone. Denial of credit on invoices addressed to the Head Office - HELD THAT - Such invoices were addressed to Waldies Division and given that the Appellant had only one factory in the Waldies Division , denial of such credit is unjustifiable by following the decision rendered in PAREKH PLAST (INDIA) PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VAPI 2011 (6) TMI 595 - CESTAT, AHMEDABAD - In so far as the ISD invoices are concerned, such invoices clearly reflected that the credit was being distributed to the Waldies Division and therefore non reflection of the factory address is only a curable procedural defect not warranting denial of the substantive benefit of cenvat credit. Appeal allowed in part.
Issues Involved:
1. Irregular availment of Cenvat credit on outward transportation of finished goods. 2. Denial of Cenvat credit on inward transportation of raw materials and fuel. 3. Denial of Cenvat credit on outward transportation of finished goods to depots. 4. Denial of Cenvat credit on input services other than Goods Transport Agency (GTA). 5. Denial of Cenvat credit on ISD invoices. Detailed Analysis: 1. Irregular Availment of Cenvat Credit on Outward Transportation of Finished Goods: The appellant, M/s. Gillanders Arbuthnot and Company Limited, was accused of irregularly availing Cenvat credit of ?32,86,580/- on outward transportation of finished goods from the factory to the buyer’s premises, which was contested as not qualifying as an input service under Rule 2(l) of the Cenvat Credit Rules (CCR). The adjudicating authority upheld this demand, but the appellant argued that only ?3,26,055/- pertained to outward transportation to the buyer’s premises, supported by a Chartered Accountant’s certificate. The tribunal found that the Notice was confined to outward transportation to the buyer’s premises and that the other credits were beyond the scope of the Notice, thus violating principles of natural justice. The tribunal also noted that the interpretation of the place of removal was subject to varying judicial interpretations, and the extended period for raising the demand was not justified. Consequently, the demand was limited to the normal period of limitation, upholding a demand of ?7,727/- for December 2012. 2. Denial of Cenvat Credit on Inward Transportation of Raw Materials and Fuel: The appellant claimed that the credit availed on transportation of raw materials and fuel to the factory premises was an inward transportation specifically covered by the definition of input service. The tribunal agreed with the appellant, noting that the payment of service tax on these services was not disputed and was supported by sample monthly calculation sheets and tax payment challans. Therefore, the denial of credit on this ground was found to be unjustified. 3. Denial of Cenvat Credit on Outward Transportation of Finished Goods to Depots: The appellant contended that the credit availed on outward transportation of finished goods to depots was covered by the inclusive definition of input service, as depots are considered places of removal under Section 4(3)(c)(iii) of the Central Excise Act read with Rule 2(l) of the CCR. The tribunal supported this contention, finding that the payment of service tax on these services was evident from the records, and thus, the denial of credit on this ground was also unjustified. 4. Denial of Cenvat Credit on Input Services Other than GTA: The appellant argued that the denial of credit on input services other than GTA, amounting to ?3,39,673/-, was based on a procedural breach, as the invoices were addressed to the Head Office but clearly reflected the "Waldies Division." The tribunal found merit in this argument, noting that the appellant had only one factory within the Waldies Division, and thus, the denial of credit on this ground was unjustifiable. 5. Denial of Cenvat Credit on ISD Invoices: The appellant contended that the denial of credit on ISD invoices, amounting to ?22,35,066/-, was based on the invoices reflecting the recipient as the "Waldies Division" without factory particulars. The tribunal agreed with the appellant, finding that this was a curable procedural defect, and the substantive benefit of Cenvat credit should not be denied. The tribunal relied on precedents to support this conclusion. Conclusion: The tribunal set aside the impugned Order-in-Appeal and allowed the appeal, providing consequential relief to the appellant. The tribunal pronounced this judgment in open court on 23 January 2020.
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