2024 (6) TMI 41 - AT - Central Excise

CENVAT Credit - eligible services in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - invocation of extended period of limitation - HELD THAT - Revenue has already issued a show-cause notice dated 06.12.2010, covering the period November 2005 to March 2010, disputing the eligibility of certain services to credit and invoking extended period. The said show-cause notice has been dropped by the Commissioner; the appeal filed by the Department against that order was rejected by this Bench in 2021 (12) TMI 381 - CESTAT BANGALORE , while deciding the issue in favour of the appellants. It is found that in the instant case also extended period has been invoked while relying on the data which was already available with the Department. It is found that where there are no changes in the material facts of the case and the information available with the Department extended period cannot be invoked again in the subsequent period as held by the Hon ble Supreme Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP 2006 (4) TMI 127 - SUPREME COURT . Invocation of extended period requires the evidence regarding the satisfaction of the conditions prescribed therein like suppression of facts etc. with an intent to evade payment of duty. Leaving alone such proof, it is found that learned Commissioner does not even discuss as to why extended period can be invoked. We are of the considered opinion that such a show-cause notice and the impugned order cannot be sustained. The invocation of extended period is a weapon in the hands of the Department to demand duty where the belligerent assessee evades payment of duty and not in cases wherein all the material facts of the case were available with the Department and show-cause notices are being issued regularly on the same issue. Therefore, the appellants have a strong case in their favour on limitation. CENVAT Credit - HELD THAT - The appellants are agreed upon that the services on which credit was availed are integral to the business of manufacture carried out by the appellants. In fact this Bench in 2021 (12) TMI 381 - CESTAT BANGALORE has analyzed various services on which the appellants have availed credit and have decided the issue in favour of the appellants. The appellants therein has relied upon various cases to justify the credit taken in respect of 67 services on which credit was taken. The appellants have a strong case in their favour. The impugned order cannot be sustained and is liable to be set aside - Appeal allowed.

Issues:
1. Limitation period for issuing show-cause notice.
2. Eligibility of services for cenvat credit.
3. Invocation of extended period for demanding duty.
4. Merits of the case regarding availing credit on services.

Analysis:

1. Limitation period for issuing show-cause notice:
The case involves a dispute over the limitation period for issuing a show-cause notice by the Department. The appellants argue that the show-cause notice issued beyond the limitation period is not sustainable. They contend that the Department had missed out certain services in a previous show-cause notice, and therefore, invoking the extended period for subsequent notices is unjustified. The appellants rely on various legal precedents to support their argument. The Tribunal agrees with the appellants, emphasizing that where there are no changes in material facts and the information is already available with the Department, the extended period cannot be invoked repeatedly. The Tribunal cites the Supreme Court's decision in the case of Nizam Sugar Factory to support its conclusion.

2. Eligibility of services for cenvat credit:
The dispute also revolves around the eligibility of certain services for cenvat credit under Rule 2(l) of the Cenvat Credit Rules, 2004. The appellants argue that the definition of 'input services' should be interpreted based on the provisions applicable during the relevant period. They assert that the impugned order goes beyond the show-cause notice and confirms demands on grounds not alleged in the notice. The appellants cite legal cases to support their argument. The Tribunal agrees with the appellants, stating that the impugned order cannot be sustained as it exceeds the scope of the show-cause notice. The Tribunal emphasizes that the invocation of extended period must be based on evidence of suppression of facts with an intent to evade duty, which was lacking in this case.

3. Invocation of extended period for demanding duty:
The Department contends that the credit on certain services, not covered by Rule 2(l), was wrongly availed by the appellants. The Department argues that credit on such services cannot be permitted. However, the Tribunal finds that the Department's invocation of the extended period for demanding duty is unjustified. The Tribunal notes that the Department had already issued a show-cause notice in the past on similar grounds, which was dropped by the Commissioner. The Tribunal emphasizes that the invocation of the extended period should be based on specific conditions, such as suppression of facts, which were not met in this case.

4. Merits of the case regarding availing credit on services:
On the merits of the case, the Tribunal agrees with the appellants that the services on which credit was availed are integral to the business of manufacture. The Tribunal refers to a previous Final Order where it analyzed and decided in favor of the appellants regarding the credit on various services. The Tribunal cites legal precedents and High Court judgments to support the appellants' claim that the credit was correctly availed. Consequently, the Tribunal concludes that the appellants have a strong case in their favor, and the impugned order cannot be sustained.

In conclusion, the Tribunal allows the appeal in favor of the appellants, setting aside the impugned order and providing consequential relief as per the law.

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