TaxTMI 
TaxTMI 
2026 (2) TMI 517
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.... 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. 1.2 The Appellant is engaged in the manufacture of excisable goods falling under Chapter 72 of the Central Excise Tariff Act, 1985 and was duly registered with the Central Excise department. During the relevant period, the Appellant discharged service tax liability on GTA services under reverse charge mechanism and availed CENVAT credit of such service tax treating the same as "input service" under Rule 2(l) of the CENVAT Credit Rules, 2004. 1.3 Two Show Cause Notices dated 13.02.2012 and 04.10.2012 were issued proposing denial of the aforesaid credit on the ground that post 01.03.2008, GTA services stood excluded from the definition of "output service" under Rule 2(p) of the CENVAT Credit Rules, 2004 and therefore CENVAT credit was not admissible. The notices also proposed invocation of extended period, recovery of interest and imposition of penalty. 1.4 After due process of law, the Commissioner confirmed the demands with interest and imposed penalties by invoking the extended period of limitation. 2. Aggrieved, the appellant is before this Tribunal. 3. The Ld. Advocate ....
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.... laid down by the Hon'ble Supreme Court in Ultratech Cement. 5.3 The respondent supports invocation of extended period alleging suppression and contends that penalty has been rightly imposed. 6. We have heard the Rival submissions of both the sides. We have also perused the appeal records, show cause notices, impugned Order-in-Original, written submissions placed on record, the relevant statutory provisions of the Finance Act, 1994 and the CENVAT Credit Rules, 2004, as well as the judicial precedents cited by both sides. 7. Upon such consideration, the following issues arise for our determination as to: - i. Whether CENVAT credit of service tax paid on GTA services is admissible for the period from April 2008 to August 2012; ii. Whether the extended period of limitation is invokable and penalty imposable? Issue No.1: Admissibility of CENVAT Credit on GTA Services (April 2008 - August 2012) 8.1 The first and principal issue arising for our determination is whether the Appellant is entitled to avail CENVAT credit of service tax paid on Goods Transport Agency (GTA) services during the period April 2008 to August 2012. We find that the entire foundation....
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....TA service was excluded from output service under Rule 2(p), it cannot be automatically inferred that service tax paid on GTA ceases to be eligible input service credit. The Department's approach of treating Rule 2(p) amendment as a substantive bar on credit is therefore legally untenable. 8.3 We find that the very basis adopted in the SCNs, namely that credit is barred because tax was paid only on 25% of freight under abatement notifications, is also legally misconceived. Notifications such as Notification No. 32/2004ST and Notification No. 13/2008-ST grant 75% abatement subject to the condition that the Goods Transport Agency (service provider) has not availed CENVAT credit on inputs, capital goods or input services used for providing GTA service. The restriction is therefore imposed only on the GTA provider, to prevent double benefit. There is no statutory condition in these notifications prohibiting the recipient, who is liable to pay service tax under reverse charge, from availing credit of the tax so paid. 8.4 This position has been expressly clarified by the Central Board itself in CBEC Circular F. No. 166/1/2006-CX.4 dated 03.10.2007, wherein the Board categorically o....
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....ed under reverse charge does not alter credit eligibility. 8.8 The Revenue's reliance on Union of India v. Ultratech Cement Ltd., 2018 (9) GSTL 337 (SC) is misplaced, as Ultratech only holds that credit is not available beyond the place of removal; it does not lay down that buyer's premises can never constitute the place of removal. The decisions in Roofit and EMCO clarify that in FOR destination contracts, the buyer's premises may itself become the place of removal. 8.9 This position has been clarified administratively by CBIC Circular No. 988/12/2014-CX dated 20.10.2014 and Circular No. 1065/4/2018-CX dated 08.06.2018, which state that "place of removal" must be determined with reference to contractual terms of sale, transfer of property, and allocation of risk, and cannot be assumed as factory gate in every case. 8.10 In the present case, we find that the SCNs have proceeded solely on Rule 2(p) amendment and abatement condition, without even alleging that GTA services were availed beyond the place of removal. Since the Appellant claims that sales were on FOR destination basis and freight formed part of assessable value, contractual documentation becomes crucial. However....
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....at the irregularity came to light only during audit. It is argued that but for audit detection, the wrongful availment would have continued, resulting in loss of revenue. The Department therefore submits that suppression is established and extended period is rightly invoked. In support of penalty, reliance is placed on Punjab Tractors Ltd. v. CCE, 2005 (181) ELT 380 (SC), Gujarat Travancore Agency v. CIT, 1989 (42) ELT 350 (SC) and Amtek Auto Ltd. v. CCE, 2001 (127) ELT 295 (Tri.-Del.). 9.3 We have carefully considered the rival submissions and perused the records. At the outset, we find that the present proceedings arise out of two separate Show Cause Notices issued for successive periods on the very same issue of availment of CENVAT credit on GTA services. It is undisputed that the availment of credit was reflected in statutory returns and was within the knowledge of the Department. Once the first notice was issued on the same set of facts, the Department cannot subsequently allege suppression or fraud again for the later period by issuing a second notice invoking the extended period on identical grounds, because the facts stood already disclosed and were within departmental k....
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....k Auto (supra) involved a case of deliberate violation without disclosure, distinguishable on facts. Accordingly, these decisions do not assist the Revenue in sustaining extended limitation in the present case. 9.8 In view of the above, we hold that the extended period of limitation under the proviso to Section 11A(4) is not invocable in the facts of the present case. The first SCN, insofar as it travels beyond the normal period, is hit by limitation. The second SCN, being issued on the same issue after the Department was already in knowledge, cannot invoke suppression again and is necessarily restricted to the normal period alone, in terms of the binding ratio of Nizam Sugar Factory, 2006 (197) ELT 465 (SC). 9.9 Consequently, the imposition of penalty under Rule 15(2) read with Section 11AC, which is contingent upon fraud, collusion or suppression with intent to evade, cannot be sustained. At best, if any ineligible credit for the normal period is finally determined after remand, penalty, if at all imposable, can only fall within the scope of Rule 15(1) as a civil consequence, and not under the mandatory penalty provision requiring mens rea. 9.10 Further, since substantia....
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....C Circulars dated 20.10.2014 and 08.06.2018. Since the relevant purchase orders, FOR destination clauses, risk transfer conditions and documentary evidence have not been examined, the issue cannot be conclusively decided at this stage. Accordingly, the matter is remanded to the adjudicating authority for the limited purpose of verifying the contractual place of removal and thereafter deciding admissibility of GTA credit strictly in accordance with Rule 2(l) and the binding precedents noted above. 11. Insofar as limitation, extended period and penalty are concerned, we find that the proceedings arise out of two Show Cause Notices issued on the very same issue of availment of CENVAT credit on GTA services. The availment of credit was consistently disclosed in statutory ER-1 returns and was therefore within the knowledge of the Department. Once the Department had issued the first notice on the same facts, invocation of suppression or fraud again in the second notice is impermissible. The Hon'ble Supreme Court in Nizam Sugar Factory v. CCE, 2006 (197) ELT 465 (SC) has categorically held that where the facts are already in the knowledge of the Department, the extended period cannot b....