2021 (8) TMI 649 - AT - Central Excise

CENVAT Credit - input services - service tax paid on outward transportation of finished goods i.e. transportation of goods - place of removal - time limitation - HELD THAT - On perusal of the excise invoices issued by the appellant to their buyer M/s General Motors India Pvt. Ltd., being invoice dated 31 July, 2012, it is evident that freight is not a part of the sale price, and freight has been shown separately after charging the excise duty on the ex-factory price. Thus, under the Sale of Goods Act, in view of the terms of sale between the parties, the property in the goods is transferred on the event of goods being delivered to the transporter by the seller for delivery to the buyer, unless otherwise so stipulated in the contract - in the facts and circumstances, the place of removal is the factory gate of the appellant seller - the appellant have been rightly denied Cenvat credit on merits. Time limitation - HELD THAT - The appellant is registered unit and have been in LTU for most of the period under dispute. LTU was created by the Department to cater to the large assesses for smooth assessment and compliance of the tax liability. In LTU there are few number of assesses, as compared to the normal Commissionerate and hence the Department has a better grip and knowledge about affairs of a manufacturing unit in the LTU jurisdiction. Further, it is an admitted fact that the appellant have been filing regular returns with the Department - there is no mala fide on the part of the appellant in having taken credit, which has been duly recorded in the books of account ordinarily maintained in the normal course of business - the extended period of limitation is not invokable. Appeal allowed in part.

Summary

Issues involved:
1. Applicability of Cenvat credit on outward transportation of goods.
2. Validity of show cause notices issued by the Revenue.
3. Admissibility of extended period of limitation.
4. Imposition of penalty under Rule 15(1) of the Cenvat Rules.

Analysis:
1. Applicability of Cenvat credit on outward transportation of goods:
The appellant, engaged in manufacturing engine and transmission parts, claimed Cenvat credit on service tax paid for outward transportation of finished goods. The Revenue contended that credit can only be availed up to the place of removal, which is the factory gate. This issue was contested through show cause notices leading to a common order confirming the demand.

2. Validity of show cause notices:
The show cause notices issued by the Revenue were adjudicated together, resulting in confirmation of the proposed demand. The appellant then appealed before the Commissioner (Appeals) who partially confirmed the demand for specific periods while dropping it for others. The Commissioner invoked the extended period of limitation due to the appellant's failure to disclose the credit details in their ER-1 returns.

3. Admissibility of extended period of limitation:
The Commissioner upheld the extended period of limitation based on the audit's revelation of irregular credit availment. However, the Tribunal found that the issue was debatable, with no malafide intent on the appellant's part. Citing various circulars and judgments, the Tribunal set aside the extended period demand and penalties imposed, allowing the appeal in part.

4. Imposition of penalty under Rule 15(1) of the Cenvat Rules:
Regarding penalties, the Commissioner differentiated between the show cause notices, applying leniency to the subsequent ones. The Tribunal further modified the penalties imposed, reducing them based on the specific demands confirmed for different periods. Ultimately, the penalties were set aside in light of the debatable nature of the issue and the appellant's compliance with regular filing and record-keeping.

In conclusion, the Tribunal allowed the appeal in part, modifying the order to set aside the extended period demand and penalties imposed, highlighting the debatable nature of the issue and the absence of malafide intent on the appellant's part.