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2021 (9) TMI 25 - AT - Central ExciseRecovery of CENVAT credit - Duty paying documents - credit availed on the basis of bills/photocopy of bills which were issued to the address of the head office - Rule 9 of the Cenvat Credit Rules, 2004 - CENVAT credit on bank advices - auxiliary insurance services - Extended period of limitation - Penalty - HELD THAT - The only allegation leveled in the show cause notice was that bills/photo copies of bills produced were raised in the address of the head office at 5, Bentinck Street, Kolkata-700001 and the said office did not follow the procedure of getting registered as input service distributor as required under Rule 9 of the Cenvat Credit Rules, 2004 for distribution of credit on the documents in the name of the head office. In the first place it is pointed out that even the show cause notice in opening para stated that M/s. Jai Balaji Industries Ltd (Unit IV) was earlier known as Shri Ramrupai Balaji Steels Ltd. The Appellant in reply to the show cause notice has categorically stated that the present Appellant had taken over this unit only w.e.f. 23-07-2007. Upto that point there was only one head office and one manufacturing unit. So there is no justification to deny the Cenvat credit up to the said date. Even subsequent to 23-07-2007 there is neither any allegation in the show cause notice nor any finding in the Order-in-Original that the Cenvat credit on input services was utilized in more than one unit. CENVAT credit - bank advices - auxiliary insurance services - HELD THAT - The Chartered Accountant in the certificates has certified that the said banking financial services as well as auxiliary insurance services were received and used by the Appellant. He has also certified that the Cenvat credit on such services had been availed only once as shown in their records. Despite the fact that the above Chartered Accountant s certificates are on record, the Commissioner has not rebutted or controvered the veracity of the same. Therefore, the case made out by the Department lacks sufficient reasons to deny the cenvat credit on input service in respect of banking financial services and auxiliary insurance services. Extended period of limitation - Penalty - HELD THAT - Though the show cause notice was issued under extended period of limitation where there was a proposal to impose penalty on the Appellant of ₹ 2,000/- only in terms of Rule 15(3) of Cenvat Credit Rules, 2004 read with Section 11AC of the Act - having not imposed penalty either under Section 11AC of the Central Excise Act which was duly invoked in the show cause notice or under Rule 15(4) of Cenvat Credit Rules, 2004, the Commissioner has impliedly accepted that it was not a case of willful mis-statement or suppression of facts with intent to evade payment of duty - the demand of Cenvat credit beyond the period of one year is barred by limitation. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Recovery of CENVAT credit availed on bills/photocopies of bills issued to the head office without proper distribution. 2. Applicability of extended period of limitation. 3. Imposition of penalty. Issue-wise Detailed Analysis: 1. Recovery of CENVAT Credit: The appellant, M/s Jai Balaji Industries Ltd., was engaged in manufacturing iron and steel products and availed CENVAT credit on bills issued to their head office without issuing invoices for distribution or following the required provisions. The Commissioner allowed credit of ?57,76,485/- as certain bills were in the factory's name but disallowed ?3,53,87,779/- citing non-compliance with Rule 9 of the Cenvat Credit Rules, 2004, which mandates registration of the head office as an input service distributor. The appellant argued that the credit was availed due to financial arrangements and that the eligibility of the input services was not disputed. They maintained full records, and the procedural lapse should not deny them substantive benefits. The tribunal found that the department did not prove any misuse of credit between the head office and the manufacturing unit. Citing various judgments, it was held that non-registration as an input service distributor is a procedural irregularity and does not disentitle the appellant from availing CENVAT credit. 2. Applicability of Extended Period of Limitation: The appellant contended that all transactions were reflected in their books of accounts, negating any willful misstatement to evade duty. The Commissioner imposed a penalty of ?2,000/- under Rule 15(3) of the Cenvat Credit Rules, 2004, instead of the higher penalties under Section 11AC of the Central Excise Act or Rule 15(4), implying no willful misstatement or suppression of facts. The tribunal agreed, stating that the extended period of limitation was not applicable as the Commissioner did not impose a higher penalty, indicating no intent to evade duty. 3. Imposition of Penalty: The Commissioner imposed a penalty of ?2,000/- under Rule 15(3) of the Cenvat Credit Rules, 2004, for procedural lapses. The appellant argued that the penalty should not be imposed as there was no willful misstatement or suppression of facts. The tribunal found that the Commissioner’s decision to impose a minimal penalty under Rule 15(3) instead of Rule 15(4) or Section 11AC confirmed that there was no intent to evade duty. Therefore, the imposition of a penalty was not justified. Conclusion: The tribunal set aside the impugned order, stating that the recovery of CENVAT credit was not justified due to procedural lapses, the extended period of limitation was not applicable, and the imposition of a minimal penalty indicated no intent to evade duty. The appeal was allowed with consequential relief.
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