2024 (10) TMI 1063 - AT - Service Tax

Wrongful availment of CENVAT Credit - capital goods - Dumpers - Tippers - Availment of full CENVAT Credit on capital goods instead of 50% in the first year and the balance 50% in the second year in contravention of Rule 4(2)(a) of the CCR - Availment of CENVAT Credit twice on the strength of the same invoice. Alleged wrongful availment of CENVAT Credit on capital goods namely Dumpers and Tippers - HELD THAT - With regard to availment of CENVAT Credit on dumpers and tippers, the issue is no longer res integra in terms of the decision of this Tribunal in the case of CCE, CCG ST, DELHI III VERSUS M/S BHARMAPUTRA INFRASTRUCTURE LTD. 2018 (7) TMI 438 - CESTAT NEW DELHI wherein this Tribunal observed ' Dumpers/Tippers are vehicles which are specially designed for earth moving purposes and are meant to be used in the mining area. In terms of the decision of Hon'ble Supreme Court (supra) they are not to be considered as motor vehicles. Consequently, the appellant would be eligible for Cenvat credit on dumpers / tippers as inputs which are used for providing the output service. However, the controversy stand resolved with effect from 22/06/2010 with issue of notification No. 25/2010-CE which has amended the Cenvat Credit Rules to allow Cenvat credit for dumpers / tippers registered in the name of service provider for providing taxable service for providing site formation etc.' Availment of full CENVAT Credit on capital goods instead of 50% in the first year and the balance 50% in the second year in contravention of Rule 4(2)(a) of the CCR - HELD THAT - Although in terms of Rule 4(2)(a) of the CENVAT Credit Rules, 2004, CENVAT Credit is available on capital goods - 50% in the first year of procurement of capital goods and the remaining 50% in the next year, the appellant availed the CENVAT Credit in the first year itself but was maintaining sufficient account in their CENVAT Credit Account. Therefore, in the light of the decision of the Hon ble Karnataka High Court, in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE 2011 (4) TMI 969 - KARNATAKA HIGH COURT , Wherein it has been held that if an assessee is maintaining sufficient balance in their CENVAT Credit account, there is no requirement to pay interest for the intervening period. Admittedly, in this case, the appellant was maintaining sufficient balance in their CENVAT Credit account - Therefore, they are not required to pay interest for the intervening period. Availment of CENVAT Credit twice on the strength of the same invoice - HELD THAT - From the invoices shown above, it is evident that these are two separate invoices are of same amount on which the appellant has taken the CENVAT Credit. Therefore, the appellant has not taken CENVAT Credit twice on the same invoice - The allegation made in the Show-Cause Notice is not sustainable. Consequently, no demand is sustainable on account of double availment of CENVAT Credit account by the appellant. Thus, no demand is sustainable against the appellant - no penalty is imposable on the appellant - the impugned order is set aside - appeal allowed.

Summary

Issues involved:
1. Availment of CENVAT Credit on dumpers and tippers.
2. Availment of CENVAT Credit on capital goods contrary to Rule 4(2)(a) of CENVAT Credit Rules, 2004.
3. Alleged double availment of CENVAT Credit on the same invoice.

Issue 1:
The appellant contested the denial of CENVAT Credit on dumpers and tippers. The Tribunal referenced the decision in the case of Brahmaputra Infrastructure Ltd., where it was established that dumpers and tippers used for earth moving purposes in mining areas qualify as inputs under Rule 2(k) of the CENVAT Credit Rules, 2004. The Tribunal clarified that dumpers and tippers, despite being classified under Chapter 87, are not considered motor vehicles and are eligible for CENVAT Credit. The issue was resolved with the issuance of Notification No. 25/2010-CE, allowing CENVAT Credit for dumpers/tippers registered in the service provider's name for taxable services.

Issue 2:
Regarding the availing of CENVAT Credit on capital goods, the appellant had taken the full credit in the first year instead of 50% as per Rule 4(2)(a). However, since the appellant maintained a sufficient balance in their CENVAT Credit Account during the intervening period, interest payment was deemed unnecessary. Citing the decision of the Hon'ble Karnataka High Court in CCE, LTU v. Bill Forge Pvt. Ltd., it was established that no interest is required if the balance is maintained.

Issue 3:
The allegation of double availment of CENVAT Credit on the same invoice was refuted by the appellant, supported by the existence of two separate invoices with identical amounts (invoice numbers 902166 and 902171). The Tribunal concluded that the appellant did not avail CENVAT Credit twice on the same invoice, rendering the demand unsustainable. Consequently, no penalty was imposed on the appellant, and the impugned order was set aside with the appeal allowed, providing any consequential relief.

The judgment highlights the interpretation of CENVAT Credit rules, the eligibility of certain equipment as inputs, and the importance of maintaining proper documentation and balances in CENVAT Credit accounts to avoid interest payments.