2024 (10) TMI 378 - AT - Central Excise

Recovery of wrongly availed CENVAT credit of Service Tax paid on outward transportation charges from place of removal - recovery with interest and penalty - Department issued the Show Cause Notice on the basis of this data for this period on the basis of the data provided by them inclusive of credit taken against services other than GTA services vide their letter dated 23.03.2011 - HELD THAT - The question whether this credit sought to be denied is in relation to services other than GTA services is a verifiable fact and needs to be verified from the records of the appellant. In respect of the amounts mentioned in column 5 of the table above matter needs to be remanded back to the original authority for rendering a finding after causing the verification of the records of the appellant. Though Boards circular no. 97/8/2007-CX dated 23.08.2007, 988/12/2014-CX dated 20.10.2014 and 999/6/2015-CX dated 28.02.2015 were available at the time of adjudication of the show cause notices and when the matter was considered by the first appellate authority. However no findings have been recorded in the matter by referring to these circulars. Impugned order misdirects itself by recording that in terms of Rule 9 (5) burden to prove the admissibility of the Cenvat Credit was on the appellant and appellant failed to discharge the same. Such an approach was totally uncalled for and the appellant should have been asked produce the necessary documents for verification as per the above referred Board Circulars. The matter needs to be remitted back to the original authority for consideration de novo of the issues involved in the light of Board Circulars and the documents which appellant will produce when called for. The matter is remanded to the original authority for determination of the issue - appeal allowed by way of remand.

Issues Involved:

1. Admissibility of CENVAT credit on Goods Transport Agency (GTA) services for outward transportation beyond the "place of removal."
2. Imposition of interest and penalty under the Central Excise Act, 1944 and CENVAT Credit Rules, 2004.
3. Time-barred demand for CENVAT credit.
4. Verification of CENVAT credit related to services other than GTA services.

Detailed Analysis:

1. Admissibility of CENVAT Credit on GTA Services:

The core issue in the judgment revolves around whether CENVAT credit on Goods Transport Agency services availed for transporting goods from the factory to the buyer's premises is admissible. The adjudicating authority held that such services were used beyond the "place of removal" and thus could not be considered input services under Rule 3 read with Rule 2(l) of the CENVAT Credit Rules, 2004. The appellant argued that a significant portion of the credit related to export activities, where the "place of removal" was the port, making the credit admissible. The Tribunal noted that the appellant failed to provide evidence to substantiate the claim that these services were used in manufacturing or clearing final products. The matter was remanded to the original authority for verification, emphasizing the need to consider Board Circulars and Supreme Court judgments on the "place of removal."

2. Imposition of Interest and Penalty:

The order confirmed the imposition of interest under Section 11AB/AA and a penalty under Section 11AC of the Central Excise Act, 1944, read with Rule 15 of the CENVAT Credit Rules, 2004, on the confirmed demand. The Tribunal observed that the liability to pay interest is automatic once the duty liability is upheld. However, the appellant contested the imposition of penalties, arguing that it was not warranted. The Tribunal did not find any infirmity in the impugned order regarding the interest and penalty, as the appellant failed to demonstrate any errors in the adjudication.

3. Time-Barred Demand:

The appellant contended that a portion of the demand amounting to Rs. 1,30,730/- was time-barred, as it exceeded the limitation period of one year. The Tribunal acknowledged this claim, indicating that demands beyond the statutory period without evidence of suppression or willful misstatement could not be sustained. The matter was remanded for re-examination, particularly concerning the limitation aspect.

4. Verification of CENVAT Credit Related to Other Services:

The appellant disputed the demand related to services like CHA, agency charges, and documentation charges, arguing that these were wrongly categorized under GTA services. The Tribunal noted that this aspect required factual verification from the appellant's records, as it was a verifiable fact whether the disputed credit pertained to services other than GTA. The matter was remanded to the original authority to verify the records and determine the admissibility of the credit concerning these services.

Conclusion:

The Tribunal remanded the case to the original authority for a de novo consideration of the issues, directing them to verify the appellant's records in light of the Board Circulars and Supreme Court judgments. The original authority was instructed to complete the proceedings within three months, ensuring that the appellant is given an opportunity to present necessary documents to substantiate their claims. The judgment underscores the importance of adhering to procedural fairness and the correct interpretation of legal provisions concerning CENVAT credit.

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