2019 (4) TMI 1262 - AT - Central Excise

CENVAT Credit - the denial of credit in most of the cases is either on the ground that the same are not services or on the technical ground of the invoice not being proper in terms of Rule 4A of the central Excise Rules - HELD THAT - Various disputed services or input stand held to be admissibly cenvatable input or services by the Tribunal s decision referred - Further, there is neither any allegation nor any finding to the effect that appellant has not received the said services or the said services are not tax paid or they do not stand utilized by the appellant in manufacture of their final product or in their business activity. In the absence of any findings to that effect, the denial of credit on hyper technical and procedural grounds cannot be held to be justified. Extended period of limitation - show cause notice stand issued on 24.06.2011 for the period June, 2006 to March, 2007 - HELD THAT - Revenue started investigations vide their letter dated November, 2007 and thereafter kept quiet for a period of almost five years and issued show cause notice only on 24.06.2011. There is no explanation by the Revenue for the such delayed issuance of show cause notice - the proceedings by invoking the extended period of limitation against the appellant was not justified. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of credit on input services, denial of credit on technical grounds, denial of credit on hyper-technical and procedural grounds, invocation of extended period of limitation.

Analysis:

1. Denial of Credit on Input Services:
The appellant, engaged in manufacturing sugar, molasses, spirit, and ethanol, claimed credit on inputs/capital goods and input services. The department alleged wrong availment of credit on certain input services, invoking the extended period. The Original Authority confirmed the demand, leading to a dispute. The appellant argued that certain services like Bagasse carrier structure, construction of sheds, GTA service, outdoor caterer service, general insurance, and hiring charges of vehicles were essential for their business activities and thus admissible for credit. They relied on various Tribunal decisions to support their claim.

2. Denial of Credit on Technical Grounds:
The denial of credit was based on technical grounds such as discrepancies in service provider documents, absence of registration number/address, nature of service, and utilization of photocopies instead of original invoices. The appellant contended that as long as services were provided, tax paid, received, and utilized, denial of credit on such grounds was unsustainable. They cited Tribunal orders and legal precedents to support their argument.

3. Denial of Credit on Hyper-Technical and Procedural Grounds:
The Tribunal noted that denial of credit in most cases was due to services not being recognized or technical issues with invoices. However, since there was no evidence that the services were not received, tax unpaid, or not utilized, the denial of credit on hyper-technical and procedural grounds was deemed unjustified.

4. Invocation of Extended Period of Limitation:
The show cause notice was issued for a period from June 2006 to March 2007, with the department initiating investigations in November 2007 but issuing the notice only in June 2011. The Tribunal found the delayed issuance of the notice unjustified, especially considering the appellant's prompt responses to earlier communications. Consequently, invoking the extended period of limitation against the appellant was deemed unwarranted.

In conclusion, the Tribunal set aside the impugned order, allowing the appellant's appeal and providing consequential relief. The Revenue's appeal was rejected, emphasizing the importance of justifying denials of credit and adhering to procedural timelines.