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2023 (12) TMI 1063 - AT - Central ExciseDisallowance of CENVAT Credit alongwith interest and penalties - denial of credit on the sole ground that no service has been rendered by the contractors to the Appellant and the amount paid by the Appellant is in the nature of reimbursement of capital investment and not towards the provision of any service - extended period of limitation - HELD THAT - The ground under which the Cenvat credit availed by the Appellant was denied, cannot be agreed upon - It is a settled proposition of law that Cenvat credit cannot be denied to service recipient when payment of service tax is not disputed by the department at the service provider s end. In the case of M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, ROURKELA 2023 (12) TMI 117 - CESTAT KOLKATA , this Tribunal has held that Without challenging the assessment, the department cannot question the Cenvat credit passed on by ABMCPL to the Appellant - By relying on the decision, it is held that the denial of Cenvat credit amounting to Rs. 183,36,81,368/-in this case vide the impugned order is not sustainable. Since the demand of recovery of Cenvat credit is not sustainable, the question of demanding interest and imposing penalty does not arise. Extended period of Limitation - HELD THAT - The impugned order has confirmed the demand without any conclusive evidence towards any suppression, misstatement, fraud, collusion, etc. with the intent to evade payment of service tax on part of the Appellant. Further, the Appellant being a PSU, there exists a presumption of bona fide and no allegation of suppression of facts with intent to evade payment of tax can be levelled against them without any concrete evidence - It is also observed that the factum of availment of CENVAT credit was duly reflected in the periodical returns filed by the Appellant. Therefore, the demand confirmed vide the impugned O-I-O by invoking the extended period of limitation cannot be sustained - the demands confirmed in the impugned order are liable to be set aside on the ground of limitation also. The impugned order is set aside on merit as well as on limitation - the appeal filed by the Appellant is allowed.
Issues involved:
The denial of Cenvat credit to the Appellant based on the nature of payments made to contractors and the invocation of the extended period of limitation for demanding reversal of Cenvat credit. Details of the judgment: Issue 1: Denial of Cenvat credit based on nature of payments: The appeal was filed against the Order-in- Original disallowing Cenvat credit of Rs. 183,36,81,368/- availed by the Appellant for payments made under Build, Own, Operate and Transfer agreements. The denial was primarily on the grounds that the payments were reimbursement of capital investment and not for any service provided. The Appellant argued that Cenvat credit cannot be denied when service tax payment is not disputed by the service provider. The Tribunal agreed, citing relevant case law, and set aside the demand for Cenvat credit, interest, and penalty. Issue 2: Invocation of extended period of limitation: The demand for reversal of Cenvat credit for the period April 2015 to June 2017 was made beyond the normal 2-year period prescribed under Section 11A of the Central Excise Act. The impugned order confirmed the demand without conclusive evidence of suppression or intent to evade tax by the Appellant. Given the Appellant's status as a PSU, there was a presumption of bona fide, and without concrete evidence, allegations of suppression could not be sustained. The Tribunal held that the demand based on the extended period of limitation was not valid and set aside the demands confirmed in the impugned order on the ground of limitation. Conclusion: The Tribunal allowed the appeal filed by the Appellant, setting aside the impugned order on merit and limitation. The denial of Cenvat credit was deemed unsustainable, and the demands confirmed in the order were held liable to be set aside. The Appellant was granted consequential relief as per law, and the Miscellaneous Application for additional submission was disposed of accordingly.
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