CENVAT credit

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): S.S. Garg (Judicial Member) partially allowed an appeal against the confirmation order of Commissioner (Appeals) whereby he had allowed Cenvat credit on various input services except on Hotel Inn, Guest House and Club Services, imposing penalty and interest therein.

The appellant was a wholly owned subsidiary of Honda Motor Company Pvt. Ltd., Japan and was engaged in the manufacture and sale of two-wheelers, it was registered with the Central Excise Department and undertook the manufacturing activity in its registered premises and availed various input services which aided in the manufacturing activity in one way or the other. The Department entertained the view that the appellant was not entitled to avail credit on certain input services as they did not qualify as input service as defined under Rule 2(l) of CCR, 2004.

The Department had issued a SCN dated 07-12-2016 for the period February 2013 to December 2015 demanding ineligible service tax credit availed on ineligible services to the tune of Rs.50,64,772/- in terms of Rule 14 of CCR read with Section 11A(1) and Section 11A(4) of the Central Excise Act, 1944 along with interest under Rule 14 of CCR, 2004 and for imposition of penalty under Rule 15(2) of CCR, 2004.

Counsel for the appellant, Ms. Sonal Singh submitted that the impugned order was passed without properly appreciating the definition of Input Service and the various judicial precedents on the disputed services.

The Tribunal after perusing all the records found that the appellants had availed the impugned services and use it in relation to manufacture and the appellant has been able to establish sufficient nexus with the manufacturing activity as far as cranes services are concerned which the Department has misunderstood as erection, commissioning and installation service. The Tribunal found that as far as Event Management Service was concerned, these services had been used for conducting the inaugural ceremony of the newly set up manufacturing unit where the management team traveled to the factory premises and it also involved advertisement, designing, promotional video and pandal services wherein not only the employees of the company but its customers also attended and this service had also been held to be Input Service. In relation to Management, Maintenance and Repair Service it was found that it was required for generation of electricity for carrying out the manufacturing activity and once the hiring of DG sets has been allowed by the Department then it is necessary to allow the credit of service tax paid on running expenses and maintenance charges as diesel is an input which is essential for the functioning of the DG sets hence this service also falls within the definition of Input Service. In relation to Auctioneering service it was found that service was availed for auctioning the scrap generated in the process of manufacture which was necessary, thus it was an input service.

As far as Outdoor Catering Service was concerned, the appellants said that they had engaged contractors who provided food for the guest and the dealers but this outdoor catering service had been subsequently excluded from the definition of Input Service w.e.f 01-04-2011 and the Larger Bench decision of the Tribunal in the case of Wipro Ltd. v. CCE, 2018-TIOL-3256- Tribunal (LB) wherein it had been exclusively held that CENVAT credit of outdoor catering service in view of the amended definition of Input Service w.e.f. 01-04-2011 is not available. The Tribunal while partly allowing the appeal held that the appellant was not entitled to CENVAT credit on Outdoor Catering Service.[Honda Motorcycle & Scooter (India) (P) Ltd. v. Commr. Of Central Tax, Central Excise Appeal No. 20184 of 2020, decided on 25-03-2021]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ramesh Nair (Judicial Member) allowed an appeal which was filed against the impugned order wherein Commissioner (Appeals) had disallowed the credit in respect of certain services.

The issue involved in the case was that whether the appellant was entitled to Cenvat Credit in respect of following Services namely:

  1. Air Civil Enclave Services
  2. Authorized Service Station Service.
  3. Mandap Keeper Service.
  4. Outdoor Caterer Service.
  5. Rent-a-Cab Operator’s Service.
  6. Tour Operator Service.
  7. Travel Agent Service.
  8. Renting of Immovable Service
  9. Convention Service.
  10. Company Secretary Service.
  11. Steamer Agent Service.
  12. Telecommunication Service.

The credit was disallowed on the ground that the appellant could not establish the nexus between the said services and appellant’s manufacturing/business activity. The Counsel for the appellant, Ms. Dimple Gohil submitted that in respect of all these services, the invoices were issued in the name of the appellant. All these services were used either in relation to manufacturing activity of the appellant or related to business activity. Therefore, it is clearly covered under the definition of Input Service as provided under Rule 2(l) of the Cenvat Credit Rules, 2004 at the relevant period i.e. June- 2008 to February-2009.

The Tribunal after perusal of records observed that as per the use declared by the appellant, all the services were used either in relation to the manufacturing activity of the appellant or in relation to the overall business activity. It was also not disputed that the invoices were issued in the name of the appellant therefore, there was no question of receipt and use of service by any other person except by the appellant.

The Tribunal followed the various judgments mentioned by the counsel of the appellant and allowed the appeal holding that the appellant was entitled to the Cenvat Credit.[Nayara Energy Ltd. v. C.C.E. & ST, Excise Appeal No.10249 of 2020, decided on 15-03-2021]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ramesh Nair (Judicial Member) allowed an appeal which was filed against the denial order of the Commissioner (Appeals) where the issue was to decide whether the appellant was entitled to Cenvat credit in respect of Dredging Services and Marine Consultancy Services provided by the service provider for smooth navigation of the vessels at the private jetty which is used by the appellant.

The counsel for the appellant, Mr Jigar Shah submitted that the service was provided by the service provider to the appellant and not to anyone else and the expenses for the service were borne by the appellant and services were availed for their own business purpose in order to smooth navigation of vessels, which was provided by jetty. Therefore, there was no dispute that service recipient was the appellant and they had paid the service charge. Therefore, the service clearly falls under the ambit of Input Service, as defined under Cenvat Credit Rules, 2004.

The Tribunal observed that there is absolutely no dispute that the appellant themselves were the service recipient. They borne the service charges along with service tax paid by the service provider. The Tribunal relied on the judgment of Sanghi Industries Ltd. v. CCE, 2019 (12) TMI 528 CESTAT Ahmedabad where it was held,

            “6.6 In respect of dredging services we find that the same was in respect of jetty in the factory premises and is used for transportation as well as import and export of goods. Since the services are related with the business of the company, the Appellant are eligible to avail credit of the same. As regard denial of credit on excess tax charged by the service provider, we find that the assessment at the end of the service provider has not been challenged. The Appellant has paid the amount of service tax charged to thorn. In such case, the credit cannot be denied to them. We thus are of the view that the Appellant are eligible for availing cenvat credit on impugned services, Resultantly we allow all the appeals filed by M/s Sanghi Industries Limited in the above terms with consequential reliefs, if any.”

The Tribunal while allowing the appeal set aside the impugned order and explained that location, where the service was provided, is immaterial what’s important was to see that irrespective of such services have been provided anywhere but it is for the purpose of the assessee and it is received by the assessee. If that test is qualified then it cannot be said that the service was not received by the assessee.[Ultratech Cement Ltd. v. Commr. of CE & ST, Excise Appeal No. 11218 of 2018, decided on 15-03-2021]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned orders wherein their refund claim lying unutilized in their cenvat credit account was denied to the appellant on the ground that the service on which they are taken the cenvat credit is not input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004.

Appellant was a provider of output services, providing these services required certain services to be availed from outside on which (being an EOU) the appellant was required to pay service tax under reverse charge mechanism. They paid service tax under reverse charge mechanism and took the cenvat credit of the same in their cenvat credit account. Periodically the appellant filed the refund claims for the cenvat credit lying unutilized in their cenvat credit account. The cenvat credit was sanctioned partly but the cenvat credit pertained to ‘rent a cab service’ was denied holding that the vehicles which have taken on rent by the appellant are not registered in the name of service provider, therefore, they were not entitled to take the cenvat credit on the same in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 as these were not capital goods, therefore the refund claim was denied, thus the instant appeal.

The Tribunal observed that the appellant had taken the cenvat credit on rent a cab service where the service provider had charged the service tax from them and for the remaining invoices, they have paid the service tax under reverse charge mechanism and availed the cenvat credit of the same. The Tribunal further observed that dispute in the matter was of sanction of refund claim of unutilized cenvat credit in their account not the issue of availment of the cenvat credit on the input service; therefore, the Revenue had fell in error and wanted to raise the issue of availment of the cenvat credit while entertaining the refund claim.

The Tribunal allowed the appeal holding that at the time of entertaining the refund claim, the issue of admissibility of the cenvat credit cannot be raised.[C N S Comnet Solution (P) Ltd. v. Commr. Of CE & ST, Service Tax Appeal No. 60001 of 2020, decided on 03-02-2021]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Ramesh Nair (Judicial Member) and Raju (Technical Member) allowed an appeal which was filed against in demand of reversal Cenvat Credit, Interest, and Imposition of penalty.

The issue involved in appeal was that whether Rule 6 (3) (b) and Rule 6 (3)(i)(ii) of Cenvat Credit Rules,2004 would be applicable to the removal of byproducts (i.e spent sulphuric Acid) which were removed under serial No 32 of Notification No. 04/2006 –CE dated 1st March 2006 to fertilizer manufacturing units following the procedure laid down under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rule 2001. Notices were issued for recovery of CENVAT under Rule 6(3)(b) and Rule 6(3)(i)(ii) of Cenvat Credit Rules,2004 by treating the removal of Spent Sulphuric Acid under Notification No.04/2006-CE dated 1st March,2006 as exempted goods. The Adjudicating Authority had not accepted the contention of the Appellant that the by-Products were removed at Nil rate of duty on receipt of Annexure-1 from fertilizer manufacturing units.

The Tribunal allowed the appeal and observed that the appellant were engaged in manufacture of Chemicals namely Dichloro Nitro Benzene, etc. and were availing Cenvat Credit in respect of certain inputs and inputs services during the process of manufacture Sulphuric Acid also came into existence. They further observed that appellants were clearing such Sulphuric acid to manufacturers of fertilizers by availing benefit of Procedure Chapter X (Cleared at Nil Rate of Duty). The appellants had contended that they procured Sulphuric Acid from outside and used the same in the process of manufacturing their final products. What is left after the process was nothing but the spent sulphuric acid which was waste/refuse. They claimed that the spent sulphuric acid was not a by-product. The appellant had claimed that spent sulphuric acid was the residue of the input sulphuric acid procured from outside and used in the processing within the factory. The appellant claimed that they had cleared only such Sulphuric Acid under Notification No. 4/2006 – CE. The Tribunal found that a similar issue was decided upon in the case of Nirma Limited – 2012(276) ELT 283.[Panoli Intermediate (India) (P) Ltd. v. C.C.E. & S.T., 2021 SCC OnLine CESTAT 5 , decided on 18-01-2021]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ajay Sharma (Judicial Member) allowed an appeal which was filed challenging the order passed by the Commissioner by which he had rejected the appeal filed by the Appellants while upholding the Order-in-Original. The issue involved was whether the Appellant was eligible to avail Cenvat credit of service tax paid by them on the deposit insurance service provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The appellant was engaged in providing banking and various financial services in India. The department had denied the Cenvat Credit to the Appellants on the ground that the service in issue did not qualify as “Input Service” in terms of Rule 2(l) of CCR and Cenvat Credit for the service tax paid by the Appellants for this service cannot be availed by them.

The Tribunal considered the case of South Indian Bank v. Commr. Of Customs, CE & ST, 2020-TIOL-861-CESTAT-BANG-LB in which it was held that insurance service provided by the DICGC to the Banks for insuring the deposits of the public with the Banks was an “Input Service” in terms of Rule 2(l) of CCR and Cenvat Credit for the service tax paid by the banks for this service can be availed by the banks for rendering output service.

The Tribunal, therefore, allowed the appeal keeping in view the decision of the Larger Bench of the Tribunal in the above-mentioned decision.[IDFC Bank Ltd. v. Commr. Of CGST,  2021 SCC OnLine CESTAT 2, decided on 06-01-2021]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Dilip Gupta (President) and P. Anjani Kumar (Technical Member) dismissed an appeal filed by the Department aggrieved against the order of Commissioner (Appeals).

The respondent was engaged in the manufacture of lead and zinc and is also availing CENVAT credit of duty paid on inputs and input services in terms of the provisions of the Credit Rules prevailing during the relevant period from December 2015 to March 2016. The respondent claimed to be clearing the finished goods (zinc and lead) on payment of duty and further claimed that during the relevant period, sulphuric acid was also cleared on payment of duty but some quantity of sulphuric acid was cleared to fertilizer manufacturers, after claiming exemption from payment of duty, under Entry No. 86 of the Notification dated March 17, 2012.

The Department entertained a view that sulphuric acid, cleared to the fertilizer units without payment of duty, was an exempted product and hence the respondent was liable to pay an amount in terms of rule 6(3)(i) of the Credit Rules, accordingly a show cause notice was issued proposing to recover an amount @6% of the value of sulphuric acid, in terms of Rule 6(3)(i) of the Credit Rules. The Joint Commissioner had confirmed the demand raised under rule 6(3) of the CENVAT Credit Rules 2004 for clearance of sulphuric acid from the factory of the respondent during the period from December, 2015 to March, 2016 for Rs 72,93,931. After which the respondent had filed an appeal before the Commissioner (Appeals) which had allowed the appeal relying on the Supreme Court judgment of Union of India v. Hindustan Zinc Ltd., (2015) 15 SCC 312 setting aside the order of the Joint Commissioner. Thus, the instant appeal was filed.

The Tribunal reproduced the relevant portion of the order passed by Commissioner (Appeals),

“8. I have carefully gone through the case records, grounds of appeal as well as submission made during the course of personal hearing. I find that main issue to be decided in this case are whether by product namely sulphuric acid emerges in appellant factory is covered under the definition of „excisable goods‟ as per provisions of Section 2(d) of CEA, 1944, (ii) whether the „sulphuric acid‟ qualifies as exempted goods under Rule 2(d) of Cenvat Credit Rules, 2004 and whether Rule 6 of the Cenvat Credit Rules, 2004 is applicable in the instant case or not?

*******

As per the above definition of exempted goods, goods should be excisable goods. In this regard, the adjudicating authority observed in OIO that in the budget of 2018, the definition of „excisable goods‟ in clause (d) of Section 2 of the Central Excise Act, 1944 was amended by adding an explanation that for the purposes of this clause, “goods” include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.

In view of the above, the adjudicating authority found that any by-product, though emerges due to technological necessity would be included in the definition of „goods‟, hence fall within the ambit of term „final product‟. Therefore, Rule 6 would become applicable automatically.

*******

In the light of above, I find that from decision of the Hon‟ble Supreme Court and above circular, it is clear that sulphuric acid emerged in factory of appellant was not a manufactured product and the judgment applies to both periods before and after the insertion of explanation in Section 2(d) of Central Excise Act, 1944 by Finance Act, 2008.

Since sulphuric acid emerged in factory of appellant was not a manufactured product as discussed above even after 01.03.2008, the same is not covered under definition of „excisable goods‟ as provided in Section 2(d) of CEA, 2004 accordingly it was not covered under the definition of „exempted goods‟ as provided in Rule 2(d) of Cenvat Credit Rules, 2004.

  1. I find that the adjudicating authority also tried to differentiate the case dealt by the Hon’ble Supreme Court in the case of UOI vs HZL reported at 2014 (303) ELT 321 (SC), by deciding that the Sulphuric acid is a distinct product and manufacture from the by product i.e sulphur dioxide as such the same is neither a waste product nor a by product, and the appellant have separate plant and process to manufactured the Sulphuric acid. In this regard, I observe that the Hon‟ble Supreme Court in the above-cited case and after examining the manufacture process of the appellant held that Sulphuric acid is a by-product….” I, therefore, find that there is no dispute left regarding treating the Sulphuric acid as a by-product, hence finding of adjudicating authority on this account is not correct and same is set aside.”

The Tribunal dismissed the appeal holding that there was no error in the order passed by the Commissioner (Appeals).[CCE v. Hindustan Zinc Ltd.,  2020 SCC OnLine CESTAT 336, decided on 09-12-2020]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal filed against the impugned order wherein the refund claim had been rejected in terms of the provisions effective from 01-03-2015 in case of deemed export.

The counsel for the appellant, Mr Naveen Bindal submitted that he was not contesting the matter and was taking the alternative plea that while filing the refund claim, they had reversed certain cenvat credit and as their claim of refund was pending before the adjudicating authority, an amendment took place and Central Goods and Service Tax Act (CGST Act) 2017 was introduced in place of Central Excise Act, 1944. The adjudication order was passed after the introduction of CGST Act 2017 therefore, the appellant was having no occasion to raise the issue of re-credit of cenvat credit which have reserved before the adjudicating authority; therefore, in terms of Section 142(3) of the CGST Act 2017, they were entitled to cash refund or re-credit to their cenvat credit account.

The Tribunal observed that It is a fact on record that when the appellant filed the refund claim of cenvat credit reversed by them, it was not the issue but with the introduction of CGST Act 2017, the issue of re-credit arose in terms of Section 142 (3) of the CGST Act 2017 and the appellant had no occasion to raise the issue of the re-credit before the adjudicating authority as the adjudicating authority itself had passed the impugned order after introduction of CGST Act 2017. The Tribunal relied on the judgment of Rawalwasia Ispat Udyog (P) Ltd. v. CCE, 2019 (26) GSTL 196 where it was observed that,

            “4. Considering the fact that as per Section 142 (3) of CGST Act, 2017, which was enforced with effect from 1.7.2017 if any refund arises on account of Cenvat credit, duty, tax, interest or any amount, the same shall be paid in cash to the assessee. Despite, clear-cut provisions of law in GST regime, the Commissioner (Appeals) has allowed the refund to be credited in their Cenvat Credit account which is against the spirit of law. In fact, the Commissioner (Appeals) by doing this act has dragged the appellant in unnecessary litigation before this Tribunal, the act of the Commissioner (Appeals) cannot be appreciated. Therefore, I do not find any merit in the impugned order, the same is set aside and the order of the adjudicating authority is restored.”

The Tribunal allowing the appeal held that the appellant was entitled to re-credit of the amount already reversed before the introduction of CGST Act 2017.[Great India Steel Fabricators v. CCE & ST, Excise Appeal Nos. 60833 & 60836 of 2018, decided on 10-12-2020]

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Coram of Anil Chaudhary (Judicial Member) and C.L. Mahar (Technical Member), allowed an appeal filed aggrieved by the penalties imposed on the service tax and disallowance of cenvat credit.

The appellant had set up a Shopping Mall cum Entertainment World known as ‘Treasure Island’, which is in operation since December, 2005 after completion of the construction. The appellant is registered with the Service Tax Department for various services including Renting of Immovable Property, Selling of space or time slots, Maintenance or repairs etc. They also availed input service credit with respect to various input service received for rendering the output services. The appellant have been filling their returns regularly. It appeared to Revenue that appellant have been discharging service tax on receipt basis, whereas w.e.f. 01.04.2011, service tax is liable on the billed amount, thus, there appears to be some short payment of service tax. It appeared to Revenue that the said amount of cenvat credit amounting to Rs 49, 91,539 is not admissible to appellant, as cenvat credit is admissible only when such input service/ inputs are used in providing any output service. It appeared that there is non-payment of service tax for renting of immovable property service. It was also alleged that inspite of repeated requisition, appellant have failed to submit details of the credit taken, gross amount received towards taxable services etc.

The Tribunal found that the appellant is entitled to input service credit of Rs 49, 91,591 in dispute. All the services in question were eligible input services for rendering of output services. There was no dispute as regards receipt of any of the input services. In regards to the demand of service tax the Tribunal held that said amount was also not tenable as the said demand was prima facie raised under the impression that the appellant was not entitled to cenvat credit of Rs 49,91,539/. Further, they found that the appellant have deposited the service tax as per their calculation and it was also evident from the calculation chart and the payment challans brought on record vide miscellaneous application, which was earlier allowed. The Tribunal allowed the appeal directing the adjudicating authority to verify the challans for payment of service tax along with calculation as furnished by the appellant before this Tribunal.[Entertainment world Developers (P) Ltd. v. Commr., Customs, CE & ST, 2020 SCC OnLine CESTAT 204, decided on 15-10-2020]

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Custom, Excise and Service Tax Appellant Tribunal (CESTAT): S.S. Garg (Judicial Member) remanded the matter to its original authority where the appellants had appealed against an order where the Commissioner of Central Excise and Central Tax had partially allowed and rejected their refund claim on various grounds.

The appellants were registered with the service tax department under the category of Consulting Engineering, Business Auxiliary Services, Maintenance and Repair Services, Erection, Commissioning and Installation Service and Management Consultant Services. They filed for refund claims of unutilized CENVAT credit paid on input services used for providing the Consulting Engineering Services. A show-cause notice was issued to the appellants seeking rejection of the claims on various discrepancies/shortcomings. Their claims were partially rejected and partially allowed by the concerned authority.

Disha Gursahaney, Counsel for the appellants, submitted that the order rejecting the refund was not sustainable in law as the same had been passed without appreciating the definition of ‘Input Service’, through which the refund claim could have been rejected had there been no nexus with the output service. The refunds were also rejected on certain services on the ground that there was no direct nexus between the input services which were used for providing taxable output service which was exported, but the said services were held to be input services by various decisions of the Tribunal. Further, the refund cannot be denied on the ground that there was no address of the assessee on certain invoices. Finally, the test of whether an input service adversely affects the quality and efficiency of the provisions of output service was not prescribed anywhere in the Rules. The language employed in Rules was a determinative factor of legislative intent and it was improper to add any words thereto and evolve some legislative intent, not found in the statute itself.

The Tribunal accepted the contentions raised by the appellants and held that order of the Commissioner rejecting the refund claims on the ground that there was no direct nexus between the input service and the output services was not legally sustainable. Denial of refund on lack of nexus was not sustainable in law and therefore, the appellants were entitled to the refund on the input services. The appellants were also entitled to refund of CENVAT credit in respect of Commercial and Industrial Construction Service, Company Secretary and Public Relation Management Service being essential for rendering output service.

The Tribunal remanded the matter back to the original authority and ordered them to examine the documents which may be produced by the appellants in support of their refund claims. As far as denial of refund on the basis of debit notes in which the amount paid and services received was concerned, the Tribunal held that debit note was a valid document for claiming CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004.

Finally, denial of refund on other procedural irregularities was also not sustainable in law because the appellant was engaged in the export of service, where rendering output service was essential. [Ingersoll Rand Technologies and Services (P) Ltd. v.  Commr. of Central Excise and Central Tax, 2019 SCC OnLine CESTAT 2167, decided on 22-11-2019]

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Customs, Excise & Service Tax Appellate Tribunal (CESTAT): This appeal was filed before Sulekha Beevi C.S., Member.

Facts of the case were such that appellants were engaged in manufacturing of wheels and components for cars, jeeps, tractors, commercial vehicles, etc. and were registered with the Central Excise Department.

It was found that assessee had availed CENVAT credit of service tax paid on various input services including outward freight. A show cause notice was issued proposing to recover the ineligible availed credit along with interest for which penalty was imposed. After due process of law, in respect of Goods Transport Agency services the adjudicating authority did not allow CENVAT credit but for all other services the same was allowed. Hence, this appeal was filed before the Tribunal.

M. Kannan, counsel on behalf of the appellant had submitted that appellant had sold goods to customers on FOR basis. Therefore, place of removal should be buyer’s premises. Adjudicating authority found the appellant to be not eligible for the credit of the service tax paid on the freight for outward transportation of goods upto buyer’s premises. Whereas, L. Nandakumar, counsel on behalf of respondent contended that appellant needs to produce documents in order to prove that the place of removal is the buyer’s premises. Counsel relied on the case of CCE v. Ultra Tech Cement Ltd., (2018) 9 GSTL 337 (SC) where it was held that credit is eligible from the place of removal upto the buyer’s premises.

Tribunal observed that in cases such as this when the sale takes at buyer’s premises, the place of removal is the buyer’s premises. Thus, it was necessary to determine the place of removal to consider the eligibility of credit of service tax paid on freight charges upto the buyer’s premises. Therefore, Tribunal concluded it to be a fit case for remanding it to the adjudicating authority to look into the issue of eligibility of credit on GTA services after determining the place of removal after considering the decision referred above. Therefore, the impugned order was set aside. [Wheels India Ltd. v. Commissioner (GST), 2019 SCC OnLine CESTAT 46, decided on 14-03-2019]

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Customs, Excise & Service Tax Appellate Tribunal (CESTAT): This appeal was filed before Sulekha Beevi, J. and Madhu Mohan Damodhar, Member (Technical).                                                                    

Facts of the case were that appellants were manufacturers of Camshaft Assembly Segments for Diesel Locomotives and were holding service tax registration. During verification of records of the appellant, it was found that they were providing work of reconditioning to Railways from June 2005 on agreements entered with railways.

The definition of Maintenance or Repair Service was amended according to which appellant was liable to pay service tax under the category of Maintenance or Repair Service. They failed to discharge the service tax on the services and appellant wrongly availed abatement which he was not eligible to avail. Show cause notice was issued invoking the extended period proposing to demand service tax along with interest and also for imposing penalties. The demand under Maintenance and Repair Services along with interest and imposed penalty was confirmed and was upheld by the Commissioner. Hence, this appeal was filed.

Ms S. Sridevi on behalf of appellant contended that they have provided reclamation and reconditioning of Camshaft Assembly Segments to the Railways based on work orders issued earlier. But as per the Railways, the same were not taxable since done before the specified date due to which appellant did not pay service tax for the taxable values received for the contract. For the period post the specified date, they paid service tax after availing the benefit of abatement. The same was denied by the department stating that the appellant has not fulfilled the condition of the notification barring the availment of CENVAT credit. Appellant further contended that mere non-disclosure of particulars cannot be concluded as willful suppression in order to invoke the extended period.

It was submitted by Shri B. Balamurugan that appellant had not discharged the service tax although they had provided services to the Railways. Further, they had availed the benefit after availing credit on inputs and input services.

Tribunal on finding no ingredients in the present case for invocation of the extended period set aside this impugned order. [Ceeyes Metal Reclamation (P) Ltd. v. Commissioner (GST), 2019 SCC OnLine CESTAT 31, Order dated 08-03-2019]

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Customs, Excise & Service Tax Appellate Tribunal (CESTAT): This appeal was filed before S.S. Garg, J., directed against the order passed by the Commissioner whereby the Commissioner had remanded the matter to the original authority with direction to rework the actual CENVAT credit admissible based on the excise invoices produced by the appellant.

Appellants were manufacturers of readymade garments under the Central Excise Tariff Act, 1985. They had received inputs under the commercial invoices where invoices were not containing the particulars evidencing payment of duty and utilized CENVAT Credit Rules, 2002 which suggested that the said commercial invoices were not proper documents as envisaged under Rule 7 of CENVAT Credit Rules, 2002. It was found that the appellants had suppressed the above facts with an intention to avail ineligible credit. Due to which a show cause notice was issued demanding recovery under Section 11-A(1) of the Act read with Rule 12 of the Rules. Further, a penalty equivalent to the above amount under Section 11-AC was imposed.

It was submitted that appellant had taken the CENVAT credit on commercial invoices which were not the proper document for taking the CENVAT credit. Appellants had failed to produce the excise invoices before the original authority. Commissioner had recorded that there was a statement of appellant explaining the procedure regarding availment of CENVAT credit, which shows that the appellants had not suppressed the relevant information from the Department.

Tribunal was of the view that mere failure to declare the information does not amount to willful misdeclaration or willful suppression unless there was a deliberate attempt to evade duty. Tribunal viewed that the entire demand was barred by limitation. Therefore, no reason to decide the case on merits were found and the impugned order was set aside. [Arvind Brands Ltd. v. CCE, 2019 SCC OnLine CESTAT 7, Order dated 01-03-2019]