2025 (2) TMI 848 - AT - Central Excise

Revenue fails to prove suppression for extended limitation period in Cenvat credit disputes

Mark Exhaust Systems Pvt Ltd Versus Commissioner of Central Goods and Service Tax, Faridabad

CESTAT Chandigarh allowed the appeal on limitation grounds without examining merits. The Revenue invoked extended period for demands related to wrongful ... Wrongful availment of credit on GTA service - short payment of service tax under RCM on GTA - wrong utilization of higher education cess and secondary education cess of duty for payment of central excise duty - non-reversal of Cenvat Credit under the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 - penalty imposed under Section 77 of the Finance Act, 1994 - extended period of limitation. Invocation of extended period of limitation - HELD THAT:- In the present case, demand has been confirmed by invoking the extended period of limitation, whereas the Revenue has failed to establish any of the ingredients which is required to invoke the extended period to confirm the demand - it is found that in the show cause notice as well as in impugned order, the only ground stated for invoking the extended period is that had the audit not been conducted by the department, the Cenvat Credit wrongly availed would have gone unnoticed. There is no discussion whatsoever on the allegation of suppression of material facts with intent to evade payment of duty. CENVAT Credit on outward transportation - HELD THAT:- This issue was under litigation and there were contrary judgments of various Courts and the issue was referred to the Larger Bench in the case of M/S. THE RAMCO CEMENTS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [2023 (12) TMI 1332 - CESTAT CHENNAI-LB] and the Larger Bench of the Tribunal after considering all the judgments of the High Courts and Supreme Court and Circular dated 08.06.2018 issued by the Board, has held that admissibility of Cenvat Credit on GTA service is to be considered by the adjudicating authority on the basis of the facts produced before the said authority. When the issue in dispute is under the consideration of the Court and there are contrary decisions, it is a settled law that extended period cannot be invoked. Conclusion - It has been consistently held by the Courts that in revenue neutral situation, the demand invoking extended period of limitation is not invokable as held in the case of Commr vs. Ultra Tech Cement Ltd [2018 (2) TMI 117 - SUPREME COURT], wherein it was held that when the issue is under litigation, extended period is not invokable and the penalty is not imposable. The entire demand is barred by limitation - appeal allowed only on limitation without going into the merits of the other allegations. The present appeal before the Appellate Tribunal concerns an order passed by the Commissioner (Appeals), CGST, Gurugram, partially allowing the appellant's appeal and rejecting it on certain issues related to service tax, Cenvat Credit, and education cess. The key issues considered in this case include the wrongful availment of Cenvat Credit on GTA services, short payment of service tax under RCM on GTA, non-reversal of Cenvat Credit under Rule 6(3) of the Cenvat Credit Rules, 2004, and the wrongful utilization of education cess and secondary & higher education cess for payment of excise duty.The appellant, engaged in manufacturing motor vehicle parts and iron scrap, avails Cenvat Credit under the Cenvat Credit Rules, 2004. The audit revealed discrepancies in the appellant's availing and utilization of Cenvat Credit, short payment of service tax, and incorrect utilization of education cess. The Revenue alleged that the appellant concealed material facts regarding Cenvat Credit availment, leading to a show cause notice and subsequent confirmation of demands by the Assistant Commissioner.The appellant challenged the order, arguing that the demand was time-barred and lacked evidence of intent to evade duty payment. The appellant also contested the allegations of wrongful Cenvat Credit availment on GTA services, short payment of service tax, and misuse of education cess. The appellant cited judicial precedents and argued that the demand was revenue-neutral or already settled in their favor.The Revenue, supported by legal precedents, defended the findings of the impugned order and justified the demands made. However, the Tribunal, after considering both parties' submissions and the record, found that the demand was time-barred as the Revenue failed to establish the necessary grounds for invoking the extended period of limitation. The Tribunal emphasized the importance of proving fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions to justify invoking the extended period.The Tribunal also noted that the issue of Cenvat Credit on GTA services was under litigation with conflicting judgments, leading to a referral to the Larger Bench. In light of the unsettled legal position and revenue-neutral situations, the Tribunal ruled in favor of the appellant, allowing the appeal solely on the grounds of limitation.In conclusion, the Tribunal held that the entire demand was barred by limitation and did not delve into the merits of the other allegations. The judgment was pronounced on 20.02.2025.