2026 (1) TMI 1007 - AT - Central Excise

Eligibility of input service credit for GTA in cement clearances questioned; matter remanded for fresh adjudication on recoveries.

Eligibility of input service credit for outward transportation by goods transport agency in relation to cement clearances, and distribution of credit by ... Eligibility of input service credit for outward transportation (GTA service) - clearance of cement - Distribution of CENVAT credit by input service distributor - Recovery of CENVAT credit under Rule 14 of CENVAT Credit Rules, 2004 - Place of removal - Suppression of facts - Duplication of demand - HELD THAT:- The case of the appellant, however, is that these are services utilized for the manufacture and clearance of ‘cement’ produced in these units and that, in accordance with the terms of supply placing of risk and liability upon the cement manufacturing units, utilization of ‘goods transport agency (GTA) service’ would be in connection with manufacture of cement. More so, as the appellant has not distinguished between the end uses of ‘cement’ for discharge of duty liability. This aspect has not been dealt with in the impugned order. The appellant has also contended that there has been duplication of the elements of demands fastened on the cement manufacturing units. This submission of the appellant has not been taken into consideration in the impugned order. The question of suppression of facts with intent to evade payment of duty by utilization of ineligible credit needs to be ascertained in the context of 17 factories not being cognizant about the source of credit. It is also not seen from the impugned order that the adjudicating authority had taken into consideration availability of credit exceeding the disputed amount for facilitating clearances which would allegedly be effected by utilization of CENVAT credit. In view of the deficiencies and gaps in the findings, it would be appropriate to set aside the impugned order and remand the matter back to the original authority for fresh decision on any recovery to be made from the 17 factories of the appellant. Appeal is allowed by way of remand. Issues: (i) Whether the impugned order rightly confirmed recovery of CENVAT credit and penalties from the zonal offices and the seventeen manufacturing units in respect of goods transport agency services and related distributed input credit; and (ii) whether the matter requires fresh adjudication in light of gaps in findings regarding taking/utilisation of credit, duplication of demand and suppression of facts.Analysis: Rule 7 of CENVAT Credit Rules, 2004 governs distribution by an input service distributor and does not itself confer on zonal offices the status of taking or utilising credit; Rule 14 limits recovery to cases where credit has been taken and/or utilised. The amendment to the definition of input service in rule 2(l) and issues concerning 'place of removal' under section 4(3)(c) of the Central Excise Act, 1944 are relevant to eligibility of credit for outward transportation. The record shows that the impugned order did not address whether the zonal offices or the seventeen units actually took or utilised the disputed credit, whether there was duplication in computation of demand, or whether the factories had knowledge of the source of assigned credit; these lacunae impede a conclusive adjudication on recovery and intent to evade duty.Conclusion: The impugned order is set aside and the matter is remanded for fresh decision on any recovery to be made from the seventeen factories after considering whether credit was in fact taken or utilised, addressing alleged duplication of demand and examining any suppression of facts; appeal allowed by way of remand (in favour of the assessee).