2022 (3) TMI 189 - AT - Central Excise

Tribunal rules in favor of appellant Hindustan Coca-Cola in CENVAT credit case, orders fresh hearing.

Hindustan Coca-Cola Beverages Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Bhopal

The Tribunal found in favor of the appellant, M/s Hindustan Coca-Cola Beverages Pvt. Ltd., in a case concerning the eligibility to avail CENVAT credit ... CENVAT Credit - Input Service Distributors - credit denied by the Department on the ground that after the amendment to the definition of ‘input service’ w.e.f. 01.03.2001 in section 2(l) of the CENVAT Credit Rules, 2004, the appellant was not entitled to avail CENVAT Credit on such services - periods 2012-2013, 2013- 2014 and 2014-2015 - period April 2015 to March 2016, April 2016 to March 2017 and April 2017 to June 2017 - recovery of CENVAT credit alongwith interest and penalty - invocation of extended period of limitation - principles of natural justice - HELD THAT:- The appellant has produced the reply given by the appellant to the show cause notice to all the services namely communication, maintenance and repair, courier services, security services, photocopy services, architect services, insurance services, real estate/ actuarial charges, rent-a-cab and outdoor catering - All that has been stated by the adjudicating authority is that the appellant has not been able to show any nexus between ‘the use of the service’ and ‘manufacture and clearance of the final products’. The adjudicating authority was required to examine the reply and deal with it rather than rejecting the contention by merely stating that the appellant has not been able to show any nexus. It has fairly been stated by learned counsel for the appellant that in regard to two services namely, rent-a-cab and outdoor catering, the appellant is not assailing the order on merits, but is assailing the order only on the quantification - also the reply filed by the appellant regarding the quantification of the demand of duty has not been considered at all by the adjudicating authority and in fact no finding has been recorded by the Commissioner - also, the Commissioner has not considered the issue raised by the appellant that notice could not have been issued to the recipient of service distributed by an ISD and no finding has been recorded. Invocation of the extended period of limitation - HELD THAT:- The issue relating to invocation of the extended period of limitation has been dealt with by the Commissioner in a very cryptic manner, though a detailed reply had been filed by the appellant. It is, therefore, a fit case where the matter should be remitted to the adjudicating authority for passing a fresh reasoned order after taking into consideration the reply submitted by the appellant - the adjudicating authority need not examine on merits whether the appellant was entitled to take credit on rent-a-cab or outdoor catering, as it has been stated by the learned counsel appearing for the appellant that it is not assailing the demand of credit on these two services. The Commissioner shall, for these two services, examine the quantification part only. Appeal allowed by way of remand. Issues Involved:1. Eligibility of the appellant to avail CENVAT credit distributed by Input Service Distributors (ISDs).2. Consideration of appellant's replies by the adjudicating authority.3. Quantification of the demand.4. Issuance of show cause notice to the recipient of service distributed by an ISD.5. Invocation of the extended period of limitation.Detailed Analysis:1. Eligibility of the appellant to avail CENVAT credit distributed by ISDs:The appellant, M/s Hindustan Coca-Cola Beverages Pvt. Ltd., availed and utilized input service credit for various services received by its offices registered as ISDs. The Department denied the credit on the grounds that after the amendment to the definition of 'input service' w.e.f. 01.03.2001 in section 2(l) of the CENVAT Credit Rules, 2004, the appellant was not entitled to avail CENVAT Credit on such services. The services in question included telecommunication, maintenance and repair, courier, photocopying, security, architect, insurance, real estate/properties, rent-a-cab, and outdoor catering.2. Consideration of appellant's replies by the adjudicating authority:The appellant argued that the impugned orders were non-speaking and did not consider the replies filed by the appellant. The appellant had provided specific reasons for availing CENVAT credit on each service, but the adjudicating authority rejected the contentions without detailed reasoning, merely stating that the appellant failed to show any nexus between the services and the manufacture and clearance of final products.3. Quantification of the demand:The appellant contended that the quantification of the demand was erroneous and that the adjudicating authority did not address this issue in the orders. The appellant's reply regarding the quantification of the demand was not considered, and no findings were recorded by the Commissioner.4. Issuance of show cause notice to the recipient of service distributed by an ISD:The appellant argued that the show cause notice could not have been served on the recipient of service distributed by an ISD. The adjudicating authority did not consider this issue in the order, and no findings were recorded.5. Invocation of the extended period of limitation:The appellant contended that the extended period of limitation could not have been invoked. The Commissioner addressed this issue in a very cryptic manner, without detailed reasoning, stating that the appellant's contentions were not sustainable based on settled legal positions.Conclusion:The Tribunal found that the adjudicating authority failed to consider the appellant's replies and did not provide detailed reasoning for rejecting the contentions. The matter was remitted to the adjudicating authority for passing a fresh reasoned order after considering the appellant's reply. The adjudicating authority was instructed not to examine on merits the entitlement to credit on rent-a-cab and outdoor catering services, as the appellant was not contesting these on merits but only on quantification. The impugned orders were set aside, and the appeals were allowed, with the appellant given the opportunity to submit fresh submissions within six weeks.