2024 (9) TMI 110 - AT - Central Excise

CENVAT Credit - input services - Manpower supply service and House Keeping service received by the appellant at their un-registered job working units - Availment of cenvat credit beyond six months from the date of the document - Invocation of extended period of demand - Interest and penalty. Credit availed on man power supply services and house-keeping services - Availment of cenvat credit in respect of input services consumed in the unregistered job working premises and not consumed in the registered premises - HELD THAT - The Hon ble Jurisdiction High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S. ASHOK LEYLAND LTD. 2019 (1) TMI 430 - MADRAS HIGH COURT held that the definition of input service has to be widely construed, and in terms of Rule 3, which allows the manufacturer of final products to take Credit, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of final products. It was held that the decision of the Hon ble Supreme Court in the case of Maruti Suzuki Ltd Versus CCE, Delhi-III 2009 (8) TMI 14 - SUPREME COURT is not applicable in the case of input services - the disallowance of Credit alleging that the Credit has been availed in unregistered premises requires to be set aside. Availment of cenvat credit beyond six months from the date of the document - HELD THAT - It has to be noted that when duty is paid on inputs and service tax paid on input services a right accrues for availing Credit. All the invoices have been issued prior to September 2014. This means that invoices on which Credit has been availed have been issued before the introduction of the restriction limiting the time for availing the Credit. Nothing in the provision says that the 3 proviso to Rule 4 would have retrospective effect. The very same issue was considered by the Hon ble High Court of Delhi in the case of GLOBAL CERAMICS PVT. LTD., M/S. B.R. CERAMICS (P) LTD. VERSUS THE PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, DELHI-1 2019 (5) TMI 1432 - DELHI HIGH COURT . While analyzing the issue as to whether the Credit can be availed on Countervailing Duty (CVD) paid by the appellant for imports that took place prior to the amendment to Rule 4 (1) of Cenvat Credit Rules prescribing the time limit, the Hon ble High Court held that the said provision cannot be made applicable retrospectively and that the importer would be eligible to avail Credit for the imports prior to the date of introducing the time limit - there are no hesitation to conclude that the demand raised alleging that the appellant has availed Cenvat Credit on invoices issued prior to September 2014 contravening Rule 4 of CCR, 2004 cannot sustain and requires to be set aside. Invocation of extended period of demand - HELD THAT - Though it is alleged that the appellant has suppressed facts, there is no evidence adduced by the department to establish any positive act of suppression on the part of the appellant. The issues are purely interpretational in nature. In regard to the issue whether Credit can be taken on input services received in unregistered premises, the litigation has travelled upto Hon ble High Court. In regard to the second issue whether the time limit introduced by Rule (2) would apply to invoices issued prior to the date was considered by various forums. All these would show that both these issues were debatable. For these reasons, the invocation of extended period cannot sustain. The impugned orders are set aside - Appeal allowed.

Summary

Issues Involved:

1. Credit availed on manpower supply services and housekeeping services at unregistered premises.
2. Availment of Cenvat Credit beyond the prescribed time limit of 6 months/1 year.
3. Invocation of extended period of demand.
4. Demand of interest and imposition of penalties.

Issue-wise Detailed Analysis:

1. Credit availed on manpower supply services and housekeeping services at unregistered premises:

The appellant, engaged in manufacturing ICP Engines and motor vehicle parts, availed Cenvat Credit on services such as manpower supply and housekeeping at unregistered premises. The department argued that these services were not used in the registered factory premises, thus violating Rule 3(1) of the Cenvat Credit Rules, 2004. The appellant contended that the unregistered premises were job-working units and integral to their manufacturing process. The Tribunal held that Cenvat Credit Rules do not mandate that credit can only be availed after registering the premises. Citing various case laws, it was concluded that input services used in or in relation to the manufacture of final products are eligible for credit, even if availed at unregistered premises. The Tribunal set aside the disallowance of credit on these grounds.

2. Availment of Cenvat Credit beyond the prescribed time limit of 6 months/1 year:

The appellant availed credit on invoices issued prior to the amendment in Rule 4(1) of the Cenvat Credit Rules, which introduced a time limit for availing credit. The department disallowed the credit, arguing that the invoices were beyond the 6 months/1 year limit. The Tribunal, referencing the Delhi High Court's decision in Global Ceramics Pvt. Ltd., held that the amendment could not be applied retrospectively. Therefore, the credit availed on invoices issued before the introduction of the time limit was deemed eligible. The Tribunal set aside the demand raised on this ground.

3. Invocation of extended period of demand:

The department invoked the extended period of demand, alleging suppression of facts by the appellant. The Tribunal found no evidence of any positive act of suppression or malafide intention by the appellant. The issues were deemed interpretational, with litigation extending to higher courts, indicating their debatable nature. Consequently, the invocation of the extended period was not justified, and the issue was resolved in favor of the appellant.

4. Demand of interest and imposition of penalties:

Given that the primary demands were set aside, the Tribunal found no basis for the demand of interest or the imposition of penalties. The absence of any malafide intention further negated the justification for penalties under Section 11AC of the Act. Thus, the Tribunal ordered the vacation of the protest and consequential reliefs to the appellant.

Conclusion:

The Tribunal allowed the appeals, setting aside the impugned orders and providing consequential reliefs to the appellant. The judgment emphasized that input services used in the manufacturing process, even if availed at unregistered premises, are eligible for Cenvat Credit and that amendments introducing time limits for availing credit cannot be applied retrospectively.