Cenvat credit on capital goods and suppression through non-filing returns justified denial of credit and extended limitation.

Cenvat credit on motor cars was treated as inadmissible because the underlying services did not place such vehicles within the statutory category of capital goods under the Cenvat Credit Rules, 2004. Credit on the remaining capital goods was also denied because the invoices lacked sufficient description and classification details to verify eligibility. On limitation, non-filing of ST-3 returns was treated as suppression of the credit availment from the service tax department, and disclosure in income-tax returns was held insufficient. The extended period of limitation was therefore available, and the demand was held not time-barred.

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Issues: (i) whether credit on motor cars and other capital goods was admissible as Cenvat credit; (ii) whether the demand was barred by limitation or the extended period was invocable.

Issue (i): Whether credit on motor cars and other capital goods was admissible as Cenvat credit.

Analysis: Credit on motor cars was held inadmissible because the services rendered did not fall within the category of services for which such goods could qualify as capital goods under the Cenvat Credit Rules, 2004. Credit on the remaining capital goods was also denied because the invoices did not specify the classification or description of the goods, and without such particulars it could not be verified whether they satisfied the definition of capital goods.

Conclusion: The credit on motor cars and the disputed capital goods was not admissible and the disallowance was upheld against the assessee.

Issue (ii): Whether the demand was barred by limitation or the extended period was invocable.

Analysis: The non-filing of ST-3 returns meant that the availment of credit was not disclosed to the service tax department in the manner required under the law. Disclosure in income-tax returns was held insufficient for this purpose. On that basis, the finding of wilful suppression was accepted and the extended period was held available.

Conclusion: The demand was not time-barred and the extended period was validly invoked, against the assessee.

Final Conclusion: The appeal failed both on merits and on limitation, and the partial disallowance of credit together with the revised penalty was sustained.

Ratio Decidendi: Cenvat credit on capital goods must satisfy the statutory definition and supporting invoices must disclose sufficient particulars for verification, while non-filing of statutory returns can justify a finding of suppression and invocation of the extended limitation period.

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