2024 (4) TMI 1200 - AT - Central Excise

Seeking change of cause title of the respondent from Commissioner, Central Excise, Jaipur-I to Commissioner, Central Excise CGST, Block-A, Surya Nagar, Alwar (Rajasthan)-301 001 - availment of Cenvat credit of the service tax paid on services related to repair and maintenance of motor vehicles on the strength of ISD invoices issued by its head office - invocation of extended period of limitation - HELD THAT - The period of dispute is August 2014 to November 2015 and the SCN was issued on 25.08.2017 invoking extended period of limitation under section 11A of the Central Excise Act CEA . The normal period of limitation under section 11A is one year while the extended period of limitation of 5 years can be invoked if duty is not paid, short paid, not levied, short levied or erroneously refunded by a reason of fraud or collusion or willful mis-statement or suppression of facts or violation of Act or Rules with an intent to evade payment of duty. The dispute in this case pertains to Cenvat credit in the CCR, 2004. Rule 14 of CCR provides for recovery of Cenvat credit wrongly taken or erroneously refunded. The provisions of section 11A and section 11AA of the CEA have been made applicable mutadis-mutandis for such recoveries. In other words, no separate procedure or limitation has been prescribed under Rule 14 and the limitations and procedure under section 11A applied to recoveries under Rule 14 of CCR also. If extended period of limitation can be invoked merely because the assessee is operating under selfassessment, then it should be invokable in every case because all assessees operate under self-assessment. The provision of normal period of limitation will be rendered otiose. The grounds for invoking extended period of limitation under section 11A will also become redundant if the officer is free to invoke extended period of limitation on the basis of his opinion regardless of the fact that none of the five elements required to invoke extended period of limitation are present. The assessee also cannot be faulted for not disclosing any information which it was not required to disclose under the law. The returns are designed by the Government and not by the appellant. If these returns required only the aggregate amounts of Cenvat credit taken and not invoice-wise break up, the assessee has to provide only such figures. It has no obligation whatsoever to disclose on which invoices it had availed Cenvat credit. Once the returns are filed then it is for the departmental officers to scrutinize them, call for information, if any and if necessary issue a demand within the normal period of limitation. If the officer fails to do so and any amount of duty is not paid or any Cenvat credit has been erroneously taken the extended period of limitation cannot be invoked. Hence, the demand in this case needs to be set aside on the ground of limitation alone. The case of the Revenue is that the appellant had availed Cenvat credit, which it was not entitled to and, therefore, it implies that the appellant had an intent to evade payment of duty and, hence, extended period of limitation can be invoked. This is contrary to the provisions of section 11A. It is found that the department has not been able to establish the presence of any of the five elements required to invoke extended period of limitation. The demand is, therefore, time barred and, hence, needs to be set aside. The impugned orders are set aside with consequential relief to the appellant - Appeal allowed.

Summary

Issues Involved:

1. Change of cause title due to re-organization of Commissionerates.
2. Wrongful availing of Cenvat credit by the appellant.
3. Invocation of extended period of limitation.
4. Eligibility of services for Cenvat credit distribution.
5. Imposition of interest and penalties.

Issue-wise Detailed Analysis:

1. Change of Cause Title:

The Revenue filed miscellaneous applications to change the cause title of the respondent due to the re-organization of the jurisdiction of the Commissionerates. The Tribunal allowed these applications, recognizing the necessity of updating the cause title in light of the jurisdictional changes.

2. Wrongful Availing of Cenvat Credit:

The appellant, a manufacturer of motor vehicle parts, was audited, revealing that it had availed Cenvat credit of Rs. 60,33,856/- and Rs. 23,78,767/- on service tax paid for repair and maintenance of motor vehicles. The Revenue argued that such services do not qualify as "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004, as the appellant was not a manufacturer of motor vehicles but only parts. Therefore, the credit was considered wrongly availed.

3. Invocation of Extended Period of Limitation:

The show cause notices (SCNs) issued to the appellant invoked the extended period of limitation under Section 11A of the Central Excise Act, 1944, citing non-disclosure of material facts. However, the Tribunal found that there was no fraud, collusion, willful misstatement, or suppression of facts by the appellant. It held that the appellant had no obligation to disclose invoice-wise details in its returns, and the extended period could not be invoked merely due to the self-assessment nature of the returns. Consequently, the demands were set aside on the grounds of being time-barred.

4. Eligibility of Services for Cenvat Credit Distribution:

The appellant contended that as an Input Service Distributor (ISD), it was entitled to distribute Cenvat credit on common input services across its units, as per Rule 7 of the CCR. The Tribunal noted that the definition of "input service" excludes services related to repair and maintenance of motor vehicles unless they are capital goods or used by a manufacturer of motor vehicles. Since the appellant was not manufacturing motor vehicles, the services in question did not qualify for credit distribution.

5. Imposition of Interest and Penalties:

The Revenue proposed to recover the wrongly availed Cenvat credit along with interest and imposed penalties under Rule 15(2) of the CCR read with Section 11AC. However, since the Tribunal found the demands to be time-barred due to the improper invocation of the extended period, the associated interest and penalties were also set aside.

Conclusion:

The Tribunal allowed both appeals, setting aside the impugned orders due to the demands being barred by limitation. The Tribunal did not delve into the merits of the case, as the limitation issue was dispositive. The appellant was granted consequential relief.