2018 (8) TMI 785 - AT - Central Excise

CENVAT CRedit - GTA Services for outward transportation of their final product during the period 2013-14 and 2014-15 - demand by invoking extended period of limitation - Held that - Admittedly, during the relevant period, all the decisions were in the favor of assessee laying down that credit of service tax paid on GTA services for transportation of the final product up to the buyer s premises, is permissible. Further, the credit was being availed by the appellant, by reflecting the same in their Cenvat account, which have subsequently audited and an objection was raised. The factum of reflection of credit in the statutory account is indicative of the bonafide intention. Revenue apart from making a bold observation that the assessee was aware of the fact of non-admissibility of credit, has not referred to any evidence on record to show that such credit was being availed with a malafide intention. There are no basis for the revenue to arrive at the above finding. Penalty - Held that - As the extended period has been held as non invokable, in the absence of any malafide, the penalty imposed on the appellant is also required to be set aside for the same reason. The demand having being raised beyond the limitation period is barred - adjudicating authority directed to re-quantify the demand falling within the limitation period. Appeal allowed in part by way of remand.

Summary

Issues:
1. Availment of Cenvat credit on GTA services for outward transportation.
2. Applicability of the Hon'ble Supreme Court's decision on Cenvat credit.
3. Contention on the demand's limitation period.
4. Consideration of bonafide intention in availing credit.
5. Evidence requirement for invoking longer period of limitation.
6. Setting aside the penalty imposed on the appellant.

Analysis:
1. The disputed issue in this case revolves around the availment of Cenvat credit of service tax paid on Goods Transport Agency (GTA) services for outward transportation of the final product during the period 2013-14 and 2014-15. The appellant claimed the credit based on the premise that they remained the owner of the goods until delivery at the buyer's premises, citing previous Tribunal decisions supporting their stance.

2. However, the Hon'ble Supreme Court's latest judgment in the case of Commissioner of Central Excise and Service Tax Vs Ultra Tech Cement Ltd. on 01st February, 2018, reversed previous decisions, ruling that Cenvat credit on GTA services for transportation of goods to the buyer's premises is not available to the manufacturer. Consequently, the issue was decided against the appellant on its merits.

3. The appellant contested the demand on limitation grounds, arguing that the show cause notice issued on 04.03.2016 for the period April 2013 to March 2015 exceeded the statutory limitation period. The Lower Authorities invoked the extended period of limitation, alleging the appellant's awareness of the inadmissibility of the credit and the non-inclusion of the credit in their ST-3 returns.

4. Despite the appellant's availing of the credit during a period when prevailing decisions favored such actions and reflecting the credit in their Cenvat account, the invocation of the longer limitation period was deemed unjustified due to the absence of evidence indicating malafide intent. The appellant's actions were considered to be in good faith, given the legal landscape at the time.

5. The revenue's assertion of the appellant's awareness of the credit inadmissibility lacked evidentiary support, leading to the conclusion that the longer limitation period could not be justified without positive evidence of the appellant's intent to evade duty through suppression or misleading actions.

6. Consequently, the demand raised beyond the limitation period was deemed barred, with a small period falling within the limitation period, allowing the adjudicating authority to re-quantify the demand within the permissible timeframe. The penalty imposed on the appellant was set aside due to the absence of malafide intent, in line with the non-invocability of the extended period. The appeal was disposed of accordingly.