2018 (4) TMI 1389 - AT - Central Excise

CENVAT credit - input services - construction services - extended period of limitation - Held that - the appellate authority has upheld the extended period on the short ground that the details of the services in respect of which the credit was availed has not been reflected in ER 1 return and no document/ invoices stand given by the assessee - as is seen from the above observations of the appellate authority himself no documents are required to be submitted by the assessee after 1996. If there is no legal obligation on the part of the assessee to do a particular act non observation of that procedure / act cannot be held to be violative of law - If the law does not require documents / invoices non submission of the same by an assessee is in accordance with the law and cannot be held to be a suppression or mis-statement with an intent to evade payment of duty thus justifying the invocation of longer period of limitation. The appellant have admittedly filed ER 1 returns declaring the quantum of credit availed by them and the Revenue had not taken action for a period of more than 2 to 3 years and issued the show cause notice only subsequently in January, 2016 - In the absence of any positive action on the part of the assessee to suppress the material facts from the Revenue with a guilty mind extended period cannot be held to be applicable. Appeal allowed on limitation.

Issues:
1. Availment of cenvat credit for services related to industrial construction and architect services.
2. Exclusion of construction services from the definition of input services in 2011.
3. Limitation period for issuance of show cause notice.
4. Requirement of providing details of input services for cenvat credit.
5. Application of extended period of limitation.
6. Compliance with ER 1 return filing requirements.
7. Admissibility of credit for repair and maintenance services outside factory premises but within the industrial area.

Analysis:

1. The appellant, engaged in manufacturing auto parts, availed cenvat credit of service tax for services related to industrial construction and architect services, including repair and maintenance of drains outside the factory premises.

2. The Revenue contended that construction services were excluded from the definition of input services in 2011, leading to the initiation of proceedings via a show cause notice in 2016, which was upheld by the lower authorities.

3. The advocate for the appellant challenged the order on limitation grounds, arguing that the credit was declared in the ER 1 return, making the notice issued in 2016 time-barred. The appellant also highlighted that no provision of law necessitated providing details of input services.

4. The Revenue reiterated the rejection grounds, emphasizing the lack of service details for which credit was availed, potentially justifying the application of the extended period of limitation.

5. The judgment focused on the limitation issue, noting that the appellant had declared the disputed credit in the ER 1 return, which the Commissioner (Appeals) acknowledged. The absence of a legal obligation to submit documents/invoices post-1996 was crucial in determining non-compliance.

6. Citing precedents like Bajaj Hindustan Ltd. vs. CCE, the judgment emphasized that the absence of separate credit details in returns did not imply suppression or intent to evade duty, warranting the rejection of the extended limitation period.

7. Referring to the case of Commissioner of Central Excise vs. Accurate Chemical Industries, the judgment highlighted the importance of detailed scrutiny of ER 1 returns by the Revenue to detect any discrepancies, emphasizing the lack of malafide intent in cases of short payments detected during audits.

8. Ultimately, the judgment set aside the impugned order, allowing the appeal on limitation grounds due to the absence of positive action by the appellant to suppress material facts, leading to the inapplicability of the extended period of limitation.

This detailed analysis of the judgment addresses the key issues involved, highlighting the arguments presented by both parties and the legal reasoning behind the decision rendered by the appellate authority.

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