2019 (7) TMI 1012 - AT - Central Excise

Tribunal Allows Appeals on Limitation Grounds, Remands for Fresh Adjudication

M/s. Godrej Consumer Products Ltd. Versus The Commissioner of GST & CE

The Tribunal allowed Appeal Nos. E/41761/2018 and E/41762/2018, setting aside the impugned orders based on the grounds of limitation. Appeal No. ... CENVAT Credit - input services through ISD invoices passed on by their head office - construction service - period May 2012 to January 2014 - Suppression of facts or not - invocation of Extended period of Limitation - HELD THAT:- In the present case, the period involved is May 2012 to January 2014 and the SCN is dated 17.11.2016. From the documents placed on record there have been queries and replies by the assessee and one of the earliest queries by the Revenue is dated 20.09.2013. There were also replies filed on various dates and one of such replies is dated 10.06.2014 wherein, the details have been explained very clearly covering all the points in dispute. These points clearly show that the Revenue was in fact aware of the activities of the appellants. The stand of the Revenue as to suppression is, therefore, only on imaginations, which is not supported by any documentary evidence, which cannot sustain. Revenue has miserably failed to justify invoking larger period of limitation and therefore, the impugned order cannot sustain. Hence the same is set aside. Appeal allowed on limitation. Issues Involved:1. Eligibility of Cenvat credit availed on construction services.2. Jurisdiction of issuing Show Cause Notice (SCN) to the recipient unit.3. Invocation of extended period of limitation.4. Reversal of Cenvat credit at the ISD level.5. Revenue neutrality and distribution of Cenvat credit by ISD.Detailed Analysis:1. Eligibility of Cenvat Credit on Construction Services:In Appeal Nos. E/41761/2018 and E/41762/2018, the department alleged that the appellant-assessee availed ineligible Cenvat credit on construction services, which are specifically excluded from the definition of input service under Rule 2(l) of the Cenvat Credit Rules (CCR), 2004. The Show Cause Notices (SCNs) were issued for recovery of the ineligible credit along with interest and penalties. The adjudicating authority and the Commissioner (Appeals) upheld the recovery. However, the appellant contended that the inadmissible Cenvat credit was reversed by the ISD along with interest, and further reversal at the unit level would result in double payment. The appellant argued that the eligibility of Cenvat credit distributed by ISD should be examined by the jurisdictional authorities at the ISD level, not at the recipient unit level.2. Jurisdiction of Issuing SCN to Recipient Unit:The appellant argued that the eligibility of Cenvat credit distributed by ISD should be examined only at the ISD level by the concerned jurisdictional authorities. It was contended that no SCN should be issued to the recipient unit. The Tribunal found merit in the appellant's argument, stating that the eligibility of Cenvat credit distributed by ISD can only be examined at the ISD level.3. Invocation of Extended Period of Limitation:The appellant contended that the SCNs were issued beyond the normal limitation period and that the extended period of limitation was not invokable as there was no willful suppression of facts. The Tribunal referred to the decision in Commissioner of Customs, Central Excise and Service Tax Vs. M/s. Monsanto Manufacturer Pvt. Ltd., where it was held that the extended period of limitation could not be invoked if the department was aware of the facts. In the present case, the Tribunal observed that the department was aware of the appellant's activities through various correspondences and queries, and thus, the extended period of limitation was not justified.4. Reversal of Cenvat Credit at ISD Level:The appellant argued that the reversal of inadmissible Cenvat credit by the ISD was sufficient and further reversal at the recipient unit level was not required. The Tribunal agreed with the appellant, stating that the reversal made at the ISD level was correct and further reversal would amount to double payment.5. Revenue Neutrality and Distribution of Cenvat Credit by ISD:In Appeal No. E/41763/2018, the appellant contended that the disputed credit distributed by the ISD pertained to the brands manufactured by the appellant and was in accordance with the ISD regulations. The appellant argued that the demand was unsustainable due to revenue neutrality, as the credit availed was for services pertaining to multiple units and was distributed on a pro-rata basis. The Tribunal noted that the documents and case laws relied upon by the appellant were not considered by the lower authorities and remanded the matter for fresh adjudication.Conclusion:The Tribunal allowed Appeal Nos. E/41761/2018 and E/41762/2018 on the grounds of limitation, setting aside the impugned orders. For Appeal No. E/41763/2018, the Tribunal remanded the matter to the adjudicating authority for fresh adjudication, considering the documents and arguments furnished by the appellant. The appeals were disposed of accordingly.