2019 (6) TMI 1272 - AT - Central Excise

Tribunal overturns denial of CENVAT credit on canteen services citing lack of grounds for extended limitation

The Tribunal ruled in favor of the appellant, setting aside the denial of CENVAT credit on canteen services post-amendment due to the lack of specific ... CENVAT Credit - input services - canteen services - denial mainly on the ground that after the amendment in the definition of input service w.e.f. 01/04/2011, canteen services / outdoor catering services has been excluded from the input services vide Rule 2(l)(C) of CCR, 2004 - Time Limitation - HELD THAT:- The issue of CENVAT credit on outdoor catering service has been finally settled by the Larger Bench of this Tribunal in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III. [2018 (4) TMI 149 - CESTAT BANGALORE] wherein the Larger Bench has held that outdoor catering service is not eligible for input service credit post amendment dt. 01/04/2011 vide Notification No.3/2011 dt. 01/03/2011. Time Limitation - HELD THAT:- The appellant had a bona fide reason to believe that he is entitled to CENVAT credit as the issue relates to interpretation and therefore it cannot be alleged against the appellant that he has suppressed the material fact with intent to evade payment of duty - extended period cannot be invoked - the disputed service has been availed for the period from April 2011 to October 2013 whereas the show-cause notice issued on 02/01/2015 which is clearly beyond the normal period of one year as provided under the Act - demand is barred by limitation of time. Appeal allowed - decided in favor of appellant. Issues:- Denial of CENVAT credit on canteen services post-amendment in the definition of input service.- Invocation of extended period of limitation for the denial of CENVAT credit.Analysis:1. Denial of CENVAT credit on canteen services post-amendment:The Commissioner denied CENVAT credit on canteen services based on the exclusion of outdoor catering services from the definition of input services post the amendment effective from 01/04/2011. The appellant challenged this denial, arguing that the impugned order exceeded the scope of the show-cause notice, which primarily focused on the direct or indirect use of services in manufacturing final goods. The appellant cited various precedents to support the argument that the denial was beyond the notice's purview. Additionally, reference was made to the Hindustan Coca Cola Beverages Pvt. Ltd. case where the provision of canteen services within factory premises was considered eligible for CENVAT credit. The appellant contended that the denial of credit on canteen services was not justified.2. Invocation of extended period of limitation:The appellant contested the invocation of the extended period of limitation for the denial of CENVAT credit on canteen services. It was argued that the show-cause notice lacked specific allegations under Section 11A(4) of the Act regarding deliberate irregular credit claims or suppression of material facts with intent to evade duty payment. The appellant emphasized that all relevant details were regularly disclosed in monthly excise returns, as per precedents like Landis Plus GYR Ltd. and Sipani Fibres Ltd. The appellant relied on legal principles that extended limitation cannot be invoked when the assessee acts on a bona fide belief, supported by references to case law such as CST Vs. Vijay Televisions (P) Ltd. The appellant contended that the demand for CENVAT credit on canteen services was time-barred and should be set aside.3. Final Decision:After considering arguments from both sides and examining the legal precedents, the Tribunal ruled in favor of the appellant. The Tribunal acknowledged the settled issue regarding the ineligibility of outdoor catering service for CENVAT credit post-amendment, as established by the Larger Bench decision in the Wipro Ltd. case. However, the Tribunal held that the entire demand for CENVAT credit on canteen services was barred by limitation. The Tribunal noted the absence of specific grounds for invoking extended limitation in the show-cause notice and emphasized the appellant's regular compliance with filing returns. Considering the conflicting decisions during the relevant period and the bona fide belief of the appellant, the Tribunal concluded that the denial of credit based on limitation grounds was not sustainable. Therefore, the impugned order was set aside, and the appeal was allowed.(Order pronounced in Open Court on 21/06/2019.)