2022 (2) TMI 897 - HC - Central Excise

CENVAT Credit - goods transport service - freight incurred for the outward transportation of the final products from factory to customers' premises and utilized the same for payment of duty on final products - place of removal - suppression of facts - applicability of time limitation - HELD THAT - The issue involved herein has already been dealt with in THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, COIMBATORE. VERSUS PRICOL LIMITED, CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, SOUTH ZONAL BENCH CHENNAI 2019 (8) TMI 759 - MADRAS HIGH COURT , wherein a Co-ordinate Bench of this Court, after following the decisions of the Hon'ble Supreme Court, namely, COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. 2018 (3) TMI 993 - SUPREME COURT , and COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS M/S. THE ANDHRA SUGARS LTD. 2018 (2) TMI 285 - SUPREME COURT , disposed of the appeal, by remitting the matter to the Tribunal for fresh consideration, in accordance with law, after hearing both the parties on the applicability of the two judgments of the Hon'ble Supreme Court. The matter is remanded to the Tribunal to decide the matter afresh in accordance with law, after hearing both the parties, on the applicability of the above referred two judgments of the Hon'ble Supreme Court - Appeal allowed by way of remand.

Summary

Issues:
1. Availing CENVAT credit on service tax paid on freight for outward transportation of final products.
2. Show cause notice for recovery of credit, interest, and penalty.
3. Appeal before Commissioner of Appeals and CESTAT.
4. Tribunal's decision against the assessee.
5. Appeal challenging Tribunal's decision.

Issue 1: Availing CENVAT credit on service tax paid on freight for outward transportation of final products.
The appellant, a glass manufacturer, availed CENVAT credit on service tax paid on freight for outward transportation of final products. The department issued a show cause notice proposing recovery of the credit amount, interest, and penalty. The appellant determined duty without including the freight cost in the factory gate price. The Tribunal held that the transport service for final product delivery cannot be considered used in relation to goods clearance from the factory.

Issue 2: Show cause notice for recovery of credit, interest, and penalty.
The department issued a show cause notice to recover the CENVAT credit amount along with interest and penalty. The Commissioner of Appeals confirmed the demand under Central Excise Act sections 11A, 11AB, and 11AC, respectively. The Tribunal upheld the demand for the period before 8.8.05 and set aside the demand for the remaining period as time-barred. The Tribunal also found the appellant liable for penalty under section 11AC.

Issue 3: Appeal before Commissioner of Appeals and CESTAT.
The appellant challenged the department's proposal before the Commissioner of Appeals, who confirmed the demand. Subsequently, the appellant appealed to the CESTAT, which decided against the assessee, upholding the demand for the earlier period and setting aside the demand for the remaining time as time-barred. The case was remanded for penalty reassessment.

Issue 4: Tribunal's decision against the assessee.
The Tribunal's decision went against the appellant, upholding the demand for the earlier period and remanding the penalty assessment. The Tribunal found the appellant prima facie liable for penalty under section 11AC and remanded the case for demand quantification and penalty reassessment.

Issue 5: Appeal challenging Tribunal's decision.
The appellant appealed the Tribunal's decision, raising substantial questions of law regarding the definition of "input" and "input service" under the Central Excise Act. The issue had been previously addressed by a Co-ordinate Bench of the High Court, following Supreme Court decisions. The High Court remanded the matter to the Tribunal for fresh consideration in light of the Supreme Court judgments, ultimately setting aside the impugned order and remanding the case for reconsideration.

This detailed analysis covers the issues involved in the legal judgment comprehensively, addressing the appellant's challenges, the Tribunal's decisions, and the subsequent remand for fresh consideration based on relevant legal principles and precedents.