2018 (1) TMI 255 - AT - Central Excise

Extended period of limitation - suppression of facts - CENVAT credit - construction services - Held that - On intimation from the Range Superintendent, the appellants have furnished the invoices regarding the said construction activity. In spite of that the department has not issued the SCN during the normal period. We find no element of evidence adduced by the department to hold that the appellant is guilty of wilful suppression of facts - the said demand cannot sustain on the ground of limitation. Penalty - disallowance of Input credit - Held that - The appellants have already paid the said amount along with interest - penalty set aside. CENVAT redit - various input services - Held that - the original authority has observed that the appellant has not produced the proof for having paid the value of services or the service tax to the service providers. The appellant has submitted that they would be able to furnish the documents. We therefore, are of the considered opinion that the appellants should be given a further chance to establish their case on this count - matter remanded to the adjudicating authority, who shall re-adjudicate this issue after giving a reasonable opportunity of personal hearing to the appellants. Appeal allowed in part and part matter on remand.

Summary

Issues involved:
1. Availment of service tax credit for construction activity at new premises.
2. Alleged wrongful input credit availed on invoices from another unit.
3. Availment of service tax credit on various input services without proof of payment.

Issue 1: Availment of service tax credit for construction activity at new premises:
The appellants, a subsidiary company, shifted their operations to a new factory premises after completing construction. They had obtained Central Excise and VAT registration for the new premises to commence production. The dispute arose when the service provider raised a bill for construction activity at the old premises, which the appellant paid and availed credit for in their returns. The authorities alleged that the credit was wrongly availed. The Tribunal held that the demand of credit was time-barred as the appellant had disclosed all details in their returns and cooperated with the department's verification requests. The Tribunal found no evidence of willful suppression of facts, thus setting aside the demand.

Issue 2: Alleged wrongful input credit availed on invoices from another unit:
Another allegation was regarding the wrongful input credit availed by the appellant on invoices from another unit for materials delivered to the new factory premises. The appellant reversed the credit amount before the issuance of the show-cause notice and informed the department. The Tribunal held that since the appellant had rectified the error voluntarily, the demand for interest and penalty on the amount was not sustainable. The penalty imposed was deemed unwarranted and was set aside.

Issue 3: Availment of service tax credit on various input services without proof of payment:
The third issue involved the appellant availing service tax credit on various input services without providing proof of payment to the service providers. The appellant claimed they could furnish the necessary documents to support the credit availed. The Tribunal opined that the appellant should be given a chance to establish their case by providing the required documents. This issue was remanded to the adjudicating authority for re-adjudication after affording the appellant a reasonable opportunity for a personal hearing.

In conclusion, the Tribunal modified the impugned order by setting aside the demand for service tax credit on construction activity due to limitation, maintaining the demand for the input credit but setting aside the penalty, and remanding the issue of service tax credit on various input services for further adjudication. The appeal was disposed of accordingly with consequential reliefs.