2019 (5) TMI 1428 - AT - Central Excise

CENVAT Credit - service tax paid on supply of tangible goods and services (renting of poclainers and tippers) - period of dispute is April 2012 to June 2012 - extended period of limitation - HELD THAT - The show cause notice covered the period April 2012 to June 2012 but was issued on 09.02.2015 well beyond the normal period of limitation. There is nothing in the show cause notice to show that the appellant has committed any fraud or had colluded or had mis-stated any facts or suppressed facts. There is an allegation that they have contravened the provisions of the act or rules but there is not even a mention that such contravention was done with an intent to evade payment of duty - the extended period of limitation cannot be indicated and the entire show cause notice is time barred and needs to be set aside on this ground alone. CENVAT Credit - capital goods or not - motor vehicles - HELD THAT - The appellant could not have availed cenvat credit on the service tax paid on the hire charges for the vehicles in question. Usually dumpers and tippers which are registered as motor vehicles and there is no contrary indication in the records. Once they are registered with the Motor Vehicles Department they cannot cease to be motor vehicles thereafter. The specific inclusion of dumpers and tippers as capital goods under Cenvat Credit Rules 2004 excluded goods falling under Chapter 87 of the Central Excise Tax Act. The demand is time barred - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Time-barred show cause notice
- Eligibility of cenvat credit on service tax paid for hiring poclainers and tippers
- Classification of poclainers and tippers as motor vehicles or capital goods

Analysis:

1. Time-barred show cause notice:
The appeal challenged an Order-in-Appeal seeking to deny cenvat credit and recover an amount under Rule 14 of Cenvat Credit Rules, 2004. The show cause notice was issued on 09.02.2015 for the period April 2012 to June 2012. The appellant argued that the notice was time-barred as it lacked any allegation of fraud or intent to evade duty. The tribunal agreed, stating that the notice was beyond the normal limitation period and lacked evidence of fraud or wilful misstatement. Consequently, the show cause notice was deemed time-barred and set aside.

2. Eligibility of cenvat credit on service tax for hiring poclainers and tippers:
The appellant contended that hiring poclainers and tippers did not fall under the exclusion of motor vehicles as per Rule 2(l) of Cenvat Credit Rules, 2004. They argued that the vehicles were not capital goods and cited relevant case law to support their position. The department countered, asserting that the vehicles were indeed motor vehicles and excluded from cenvat credit eligibility. The tribunal analyzed the arguments and found that the vehicles in question were registered as motor vehicles and thus excluded from cenvat credit as per the relevant rule. Therefore, the demand for cenvat credit on the service tax paid for hiring these vehicles was deemed unsustainable.

3. Classification of poclainers and tippers as motor vehicles or capital goods:
The debate centered on whether poclainers and tippers should be classified as motor vehicles or capital goods. The appellant argued that these vehicles were capital goods based on their activity and should not be excluded from cenvat credit eligibility. They relied on case law and exemption restoration principles to support their stance. However, the tribunal noted that the vehicles were registered as motor vehicles and specifically excluded under the Cenvat Credit Rules, 2004. The tribunal concluded that the demand was sustainable on merits due to the vehicles falling under Chapter 87 of the Central Excise Tax Act. Despite this, the demand was deemed time-barred due to the absence of fraud or intent to evade duty in the show cause notice.

In summary, the tribunal set aside the impugned order due to the time-barred show cause notice lacking allegations of fraud or intent to evade duty. While the demand for cenvat credit on service tax paid for hiring poclainers and tippers was unsustainable, the vehicles were classified as motor vehicles and excluded from eligibility. The classification as motor vehicles and the absence of fraud allegations led to the demand being deemed time-barred and subsequently set aside.