2022 (3) TMI 501 - AT - Central Excise

CENVAT Credit - input services - services availed by the appellant in the course of their business of manufacturing of excisable goods - period April 2004 to September 2009 and April 2010 to November 2010 - extended period of limitation - HELD THAT - Considering the fact that the periodical show-cause notices have been issued to the appellant and during the impugned period there was a issue of availment of cenvat credit on the services was under judicial scrutiny in that circumstances extended period of limitation is not invokable. Therefore for the show-cause notice dated 03/09/2010 issued by invoking extended period of limitation it is held that the demand of extended period of limitation is not sustainable on limitation itself. The services as explained by the learned counsel during the course of arguments have been used by them for their business operations of manufacturing of excisable goods. In that circumstances relying on the decision in the appellant s own case ITC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND CUSTOMS BANGALORE-IV BANGALORE 2017 (3) TMI 1542 - CESTAT BANGALORE and in the decision of ULTRA TECH CEMENT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE KOLHAPUR 2017 (11) TMI 297 - CESTAT MUMBAI it is held that the appellant is entitled to avail cenvat credit on the above said services as the same has been used by the appellant in the course of their business of manufacturing of excisable goods. There are no merit in the impugned orders and the same are set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit on input services
- Eligibility of input services under Cenvat Credit Rules, 2004
- Applicability of extended period of limitation
- Use of services in the manufacturing process
- Precedents and legal interpretations

Analysis:

The judgment pertains to appeals against impugned orders denying cenvat credit on input services utilized by the appellant in manufacturing excisable goods during specific periods. The appellant, engaged in the production of Machine Rolled Cigarettes and Cut Tobacco, availed cenvat credit on various input services distributed by their Head Office in Kolkata and India Leaf Tobacco Division in Guntur. The Department alleged wrongful availment of Service Tax credit on certain services, leading to show-cause notices for two periods. The adjudicating authority upheld the denial of cenvat credit on specific services, deeming them ineligible under Cenvat Credit Rules, 2004, as not meeting the criteria of 'input services' under Rule 2(l). The appellant challenged these decisions, citing a previous Tribunal ruling in their favor for a different period.

The key contention revolved around the location and usage of the services, with the appellant arguing for entitlement based on prior favorable rulings. The Department opposed, emphasizing the services were utilized outside the factory premises and not in the manufacturing process, thus disqualifying them for cenvat credit. The Tribunal considered the issuance of periodic show-cause notices and the ongoing judicial scrutiny during the relevant period, concluding that the extended period of limitation was not applicable to the case initiated in 2010. Additionally, the Tribunal found merit in the appellant's arguments, supported by legal precedents and case law, establishing the services' utilization in the business operations of manufacturing excisable goods.

Relying on decisions from the appellant's previous case and precedents like Ultra Tech Cement Ltd. Vs. Commissioner of Central Excise, the Tribunal held that the appellant was indeed entitled to cenvat credit on the contested services. Consequently, the impugned orders denying the credit were set aside, and the appeals were allowed with any consequential relief. The judgment, pronounced on 03/03/2022, underscored the importance of the services' direct relevance to the manufacturing process for cenvat credit eligibility, emphasizing legal interpretations and precedents in reaching the decision.