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2025 (2) TMI 557 - AT - Service TaxCENVAT Credit - dumpers/tippers were received from M/s SREI Equipment Finance Pvt. Ltd. (SEFPL) under operating lease agreement and not registered in their name - penalty - demand of interest - extended period of limitation. HELD THAT - The issue relating to availment of Cenvat Credit on Dumpers/Tippers prior to 22.06.2010 is no more res integra. Reliance placed on the decision of Commissioner of Central Excise Bhopal vs Hindustan Copper Ltd 2016 (8) TMI 1127 - CESTAT NEW DELHI in the regard. This Tribunal in the case of Commissioner C.Ex CGST Delhi-III vs Brahmaputra Infrastructure Ltd. 2018 (7) TMI 438 - CESTAT NEW DELHI has held appellant would be eligible for Cenvat credit 6 ST/53655 of 2015 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. The definition of capital goods in clause (C) was inserted to provide availment of Cenvat credit on Dumpers/Tippers provided such dumpers and tippers are registered in the name of the service provider. When there was ambiguity in the said Rules the Tribunal and other Appellate forum allowed the credit on such dumpers/tippers following the Apex Court decision in the case of Belani Ores Ltd. Etc. vs. State of Orissa Etc. 1974 (9) TMI 115 - SUPREME COURT . However once a specific provision had been inserted in the Cenvat Credit Rules 2004 it would have to be given a strict interpretation. In the present case it is noted that the dumpers/tippers on which Cenvat credit had been availed was not registered in the name of the appellant as it was in the name of SREI Equipment Finance Pvt Ltd. As the aforesaid notification clearly laid down that such credit could be availed only if the dumpers/tippers were registered in the name of the service provider the same was not available to the appellant. Demand of interest - HELD THAT - Supreme Court in the case of Pratibha Processors Ors vs Union of India Ors 1996 (10) TMI 88 - SUPREME COURT has held that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. Accordingly the demand for interest is also upheld. Extended period of limitation - HELD THAT - Prior to the N/N. 3/2011-CE(NT) dated 01.03.2011 the issue was settled in the favour of the appellant by several decisions of the Tribunal and other appellate fora. The appellant was under the genuine belief that the Cenvat credit on such dumpers/tippers were available to him under Rule 4(3) of the said Rules. There is no evidence of their intention to evade duty. Thus the penalty under Rule 14 is not attracted. The demand for the extended period is set-aside. Conclusion - i) Since the dumpers/tippers were not registered in the appellant s name Cenvat Credit was not admissible. ii) The demand of interest upheld. iii) Demand for the extended period is set-aside. Appeal allowed in part.
The appeal concerns the denial of Cenvat Credit claimed by M/s Gajraj Minning Private Limited on dumpers/tippers not registered in their name, as per the Cenvat Credit Rules, 2004. The core issues addressed include the eligibility of Cenvat Credit on leased dumpers/tippers, the applicability of the extended period for demand, and the imposition of penalties.
Issues Presented and Considered: The Tribunal considered the following core legal questions:
Issue-wise Detailed Analysis: 1. Eligibility for Cenvat Credit on Dumpers/Tippers: The relevant legal framework includes Rule 2(a) of the Cenvat Credit Rules, 2004, which defines capital goods, and Notification No. 25/2010, which specifies that dumpers/tippers must be registered in the name of the service provider to avail Cenvat Credit. The appellant argued that ownership is not a criterion for denial of credit, citing several precedents supporting the eligibility of Cenvat Credit on leased capital goods. The Tribunal noted that prior to Notification No. 25/2010, the issue of eligibility was settled in favor of the appellant by various decisions, including the case of Hindustan Copper Ltd. However, the introduction of Notification No. 25/2010 changed the statutory position, requiring strict compliance with the registration requirement. The Tribunal emphasized the Supreme Court's ruling in Dilip Kumar & Company, which mandates strict interpretation of exemption provisions in favor of the Revenue. Consequently, the Tribunal concluded that since the dumpers/tippers were not registered in the appellant's name, Cenvat Credit was not admissible. 2. Applicability of the Extended Period for Demand: The appellant contended that the extended period under Section 73 of the Finance Act, 1994, is applicable only in cases of fraud, collusion, or willful misstatement. The appellant maintained regular accounts and filed returns, arguing that the department's delay in scrutiny does not justify invoking the extended period. The Tribunal agreed with the appellant, noting the absence of evidence indicating an intention to evade tax. The Tribunal referenced the Supreme Court's decision in Pratibha Processors, emphasizing that interest is compensatory and not punitive. Therefore, the demand for the extended period was set aside. 3. Imposition of Penalties: The Tribunal considered whether penalties under Rule 15(3) of the Cenvat Credit Rules, 2004, were warranted. The appellant argued that the lack of clarity in the statutory provisions and the absence of intent to evade duty should preclude penalties. The Tribunal concurred, finding no evidence of deliberate suppression or intent to evade duty. The penalties were deemed unjustified and were consequently set aside. Significant Holdings: The Tribunal upheld the demand for Cenvat Credit and interest for the normal period but set aside the penalty and the demand for the extended period. The Tribunal emphasized the necessity of strict compliance with statutory provisions, particularly regarding the registration requirement for availing Cenvat Credit on dumpers/tippers. Key legal reasoning included the principle that ambiguity in taxation statutes should be resolved in favor of the subject, except in the case of exemption provisions, which must be interpreted strictly in favor of the Revenue. The final determination was a partial modification of the impugned order, allowing the appeal to the extent of setting aside penalties and the extended period demand.
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