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2024 (3) TMI 801 - AT - Service TaxExtended period of limitation - suppression of facts or not - Denial of CENVAT Credit - inputs and capital goods - HELD THAT - It is a settled principle that the demand can be invoked only during the normal period of limitation unless one of the elements required to invoke the extended period of limitation were present in this case. The Commissioner held that there was suppression of facts for the reason that the assessee had not declared that it had availed CENVAT credit on certain capital goods and had also not sought any clarification from the department. It is found that the responsibility of the assessee is only to file ST-3 returns. Unless the ST-3 return requires declaration of details of the goods on which the credit was taken, CENVAT credit can be availed without declaring the details and no fault lies at the doorstep of the assessee. In fact, since the ST-3 returns are to be filed online, there is no scope for assessee to add any extra information - there is no requirement or provision under the Act to seek clarification from the Department. As far as self-assessment is concerned, it is followed by every assessee in service tax and operating under self-assessment is not a ground on which the extended period of limitation can be invoked. For these reasons, the demand of CENVAT credit for the period up to 30.06.2012 needs to be set aside on this ground of limitation alone. CENVAT Credit - capital goods - 38 tippers - 4 excavators - HELD THAT - Undisputedly the excavators, tippers and the graders were not exclusively used but were used partly for providing exempted service, namely, road construction and partly used for providing taxable services. For this reason Revenue s appeal needs to be dismissed - Appeal dismissed. Interest on capital goods CENVAT Credit - HELD THAT - There are force in the contention of the assessee insofar as the order for recovery of interest on this amount of CENVAT credit is concerned. Learned counsel for the assessee is correct in his assertion that CENVAT credit can be availed once the capital goods are received and there is no prescription under the rules as to when they should be put to use in providing taxable services nor is there any provision under which any interest can be recovered for the period between the date of taking credit and date on which they are put to such use. Therefore, the demand of interest needs to be set aside. CENVAT Credit on tyres, tubes and flaps - HELD THAT - The issue on the question of limitation has been decided in favour of the assessee. It has been found that no case has been made out by the Commissioner in the impugned order for invoking the extended period. The demand of CENVAT credit tyres tubes and flaps cannot be sustained and, therefore, needs to be set aside. CENVAT Credit on Soil Compactor and roller - HELD THAT - The Commissioner was correct in stating that as per rule 6(c) of CCR no CENVAT credit can be availed on capital goods which are used exclusively for providing exempted services. However, it is the assertion of the assessee that after the show cause notice was issued, the capital goods were indeed, used for providing some taxable service also this submission was not accepted by the learned Commissioner. Notwithstanding this fact, we find that the demand is time barred. It, therefore, could not have been sustained in any case. It is set aside on the ground of limitation. Penalties - HELD THAT - The necessary ingredient for imposing penalty under 15 of CCR or invoking section 78 is an element of fraud or collusion or willful misstatement or suppression of facts or violation of Act and Rule with intent to evade payment of service tax. We have already held that no case has been made out in the impugned order for invoking the extended period of limitation. Therefore, penalty invoking section 78 also cannot be sustained. Accordingly, the penalties of Rs. 7,46,081/- and Rs. 12,29,271/- set aside - penalty of Rs. 5000/- imposed under rule 15A cannot be sustained and, accordingly, the same also needs to be set aside. Appeal disposed off.
Issues Involved:
1. Invocation of extended period of limitation. 2. Admissibility of CENVAT credit on capital goods. 3. Recovery of interest on CENVAT credit. 4. Denial of CENVAT credit on tyres, tubes, and flaps. 5. Denial of CENVAT credit on specific capital goods. 6. Imposition of penalties. Summary: 1. Invocation of Extended Period of Limitation: The Tribunal examined whether the extended period of limitation was rightly invoked. The Commissioner alleged suppression of facts by the assessee for not declaring CENVAT credit on certain capital goods and not seeking clarifications. The Tribunal held that the responsibility of the assessee is only to file ST-3 returns and there is no requirement to declare the details of goods on which credit was taken. Therefore, the demand for the period up to 30.06.2012 was set aside on the ground of limitation. 2. Admissibility of CENVAT Credit on Capital Goods: The Revenue's appeal contested the Commissioner's decision allowing CENVAT credit on 38 tippers and 4 excavators used partly for taxable services. The Tribunal upheld the Commissioner's decision, noting that Rule 6(4) of CCR allows CENVAT credit if the capital goods are not used exclusively for exempted services. The appeal by Revenue was dismissed. 3. Recovery of Interest on CENVAT Credit: The Tribunal found that there is no legal provision requiring the recovery of interest for the period between the date of taking CENVAT credit and the date of using the capital goods for taxable services. The demand for interest was set aside. 4. Denial of CENVAT Credit on Tyres, Tubes, and Flaps: The Tribunal held that the demand for CENVAT credit on tyres, tubes, and flaps was barred by limitation and thus could not be sustained. The denial of credit on these items was set aside. 5. Denial of CENVAT Credit on Specific Capital Goods: The Tribunal noted that while the Commissioner was correct in stating that CENVAT credit cannot be availed on capital goods used exclusively for exempted services, the demand was time-barred. Therefore, the denial of credit on specific capital goods was set aside on the ground of limitation. 6. Imposition of Penalties: The Tribunal found no element of fraud, collusion, willful misstatement, or suppression of facts to justify penalties under Rule 15 of CCR or Section 78 of the Finance Act, 1994. Consequently, penalties of Rs. 7,46,081/-, Rs. 12,29,271/-, and Rs. 5,000/- were set aside. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal, setting aside the denial of CENVAT credit, demand of interest, and imposition of penalties, with consequential relief to the assessee. The appeals were disposed of accordingly.
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