2024 (10) TMI 287 - AT - Central Excise

Wrongful availment of Cenvat Credit on various input services - C F agents services - Rent of Bangalow - Rent of Office/Godown - Brokerage Charges and Maintenance Repairs of Computers and Air Conditioners - extended period of limitation - Imposition of penalties, including Penalty under Rule 26(1) of the Central Excise Rules, 2002 imposed on Shri R.K. Gupta, appellant no.2. Wrongful availment of Cenvat Credit on various input services - HELD THAT - It is not in dispute that for the subsequent periods, two show cause notices dated 07.05.2015 and 08.06.2016 for the period 2014-15 and 2015-16 respectively on the basis of same audit objections, were decided by the ld. Commissioner on 27.07.2016 and Cenvat Credit of service tax paid on all the impugned services involved in the present case, was allowed. It is also found that the department has accepted the said order of the ld. Commissioner and has not filed any appeal against the said order, which is evident from the RTI reply provided by CPIO in respect of the status of the said order. Once the department has accepted the order of the ld. Commissioner for the subsequent period, then, in that case, the department cannot take contrary stands in proceedings on the same issue for the same assessee. C F agents services - HELD THAT - The Commissioner for the subsequent periods, has discussed all the clauses of the Agreement between the appellant and C F agents and has come to the conclusion that the services provided by the C F agents to the appellant are input services used in relation to the manufacture of the finished goods. This issue is decided in favour of the assessee. Rent of Bangalow - HELD THAT - This has been held as an input service as held in various cases. Rent of Office/Godown - HELD THAT - This has held to be input service in various decisions as well. Brokerage Charges and Maintenance Repairs of Computers and Air Conditioners - HELD THAT - These services have also been held to be input services in various decisions. Extended period of limitation - HELD THAT - The demand is barred by time as the show cause notice was issued on 07.01.2011 for the period December 2005 to August 2010 without establishing the mala fide and suppression of facts on the part of the appellant as the appellant has been regularly filing the returns with full disclosure of the Cenvat Credit amount availed on the input services. Therefore, the invocation of extended period is bad in law as held in the case of GD Goenka Pvt Ltd 2023 (8) TMI 995 - CESTAT NEW DELHI . Penalty under Rule 26(1) of the Central Excise Rules, 2002 imposed on Shri R.K. Gupta, appellant no.2 - HELD THAT - The said penalty is not sustainable because the appellant no.2 was not dealing with the excisable goods. The impugned order is not sustainable in law and is liable to be set aside - Appeal allowed.

Summary

Issues Involved:

1. Wrongful availment of Cenvat Credit on various input services.
2. Applicability of extended period of limitation.
3. Imposition of penalties, including personal penalty on appellant no.2.

Detailed Analysis:

1. Wrongful Availment of Cenvat Credit on Various Input Services:

The primary issue in this case revolves around the appellant's alleged wrongful availment of Cenvat Credit for service tax paid on services such as Clearing & Forwarding Agents, rent of bungalow, brokerage charges, rent of office/godown after sale, and maintenance & repair of computers and air conditioners. The department contended that these services had no nexus with the manufacture of dutiable goods, thus disallowing the credit. However, the appellant argued that these services qualify as 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004, as they are used in relation to the manufacture and clearance of final products. The appellant relied on precedents where similar services were deemed input services, including decisions in Ambuja Cements Ltd. and others. The tribunal noted that for subsequent periods, similar issues were resolved in favor of the appellant, and the department accepted these decisions, thereby preventing it from taking a contrary stance for the same issue and assessee.

2. Applicability of Extended Period of Limitation:

The tribunal addressed the issue of whether the extended period of limitation was applicable. The show cause notice for the period December 2005 to August 2010 was issued on 07.01.2011, invoking the extended period due to alleged suppression of facts. The appellant argued that they had regularly filed returns with full disclosure, negating any mala fide intent or suppression. The tribunal found merit in this argument, citing the case of GD Goenka Pvt Ltd, and concluded that the invocation of the extended period was unjustified, rendering the demand time-barred.

3. Imposition of Penalties, Including Personal Penalty on Appellant No.2:

The tribunal also examined the imposition of penalties, including a personal penalty on Shri R.K. Gupta, appellant no.2, under Rule 26(1) of the Central Excise Rules, 2002. It was argued that appellant no.2 was not dealing with excisable goods, and thus, the penalty was unwarranted. The tribunal agreed, referencing cases like Zapak Digital Entertainment Limited and Steel Tubes of India, which supported the appellant's position that the penalty was unsustainable.

Conclusion:

The tribunal concluded that the impugned order was not sustainable in law. It set aside the order, allowing both appeals with consequential relief as per law. The tribunal emphasized that the issues were no longer res integra, given the consistent judicial precedents favoring the appellant on similar matters.