By TIOL News Service

MUMBAI, JUNE 16, 2016: THE appellant availed Cenvat Credit in respect of construction services for the construction of guest house, staff quarters, flooring work at colony, septic tank of security barracks, club house, bank building, hawankund shed, temple etc.

SCN was issued proposing disallowance of Credit on the ground that these services were not in relation to manufacture of final product.

The demand of Rs.17,78,562/- was confirmed by the adjudicating authority along with interest and equal penalty.

The Commissioner (A) upheld the demand of Cenvatcredit, however, reduced the interest on the basis of amount of Cenvat Credit not utilized and also waived the penalty on the ground that on the issue of admissibility of Cenvat Credit on construction service there are various contradictory decisions of the Tribunals.

The appellant is before the CESTAT.

It is submitted that although relief is given from imposition of penalty on the ground that the issue involved is interpretation of statute, yet the benefit of limitation has not been extended. The appellant informed that along with the monthly ER-1 Return they had been regularly submitting the copies of cenvatable invoices and, therefore, there is no suppression of fact on the part of the appellant. Reliance is placed on a host of decisions viz.

2009-TIOL-63-SC-CX, 2012-TIOL-1702-CESTAT-AHM, 2015-TIOL-1954-CESTAT-AHM, 2012-TIOL-74-CESTAT-DEL, 2015-TIOL-1988-CESTAT-DEL, 2014-TIOL-2298-CESTAT-DEL, 2012-TIOL-154-CESTAT-MAD, 2009-TIOL-189-CESTAT-DEL, 2011-TIOL-1792-CESTAT-DEL & 2015-TIOL-120-CESTAT-MUM.

Moreover, construction has been done within the factory premises, therefore, it is directly or indirectly related to the factory activities and credit is admissible. Case laws cited are - 2012-TIOL-199-HC-AP-ST, 2015-TIOL-2162-CESTAT-DEL & 2015-TIOL-1842-CESTAT-MUM.

The AR justified denial of the credit and relied on the following case laws - 2010-TIOL-720-HC-MUM-ST, 2015-TIOL-1757-CESTAT-MUM, 2011-TIOL-132-CESTAT-DEL, 2014-TIOL-409-CESTAT-BANG, 2009-TIOL-1959-CESTAT-DEL & 2011-TIOL-383-HC-AHM-ST. In the matter of limitation, it is submitted that there is a suppression of fact on the part of the appellant as the use of construction service was not declared by the appellant. Case laws relied upon - 2010-TIOL-623-HC-MAD-ST, 2011-TIOL-21-SC-CX & 2015-TIOL-295-CESTAT-MUM.

The Bench observed -

Limitation:

++ As regards the issue of time bar, I find that during the relevant period the appellant have been regularly submitting all the cenvatable invoices along with their monthly ER-1 return, as evident from the covering letter of monthly ER-1 return. [Scanned copies of the sample letters duly acknowledged by the department were placed in the order by the Bench.]

++ From the above letters, it is clear that the appellant have been submitting cenvatable invoices to the Jurisdictional Range Office. Therefore, the entire detail of Cenvat Credit and nature of services were available with the department. It cannot be said that there is suppression of fact on the part of the appellant.

++ Commissioner (Appeals) admitted that on the issue of Cenvat Credit on construction services, there were contradictory judgments and the issue involved is purely the matter of interpretation of statute. This finding of the Commissioner has not been challenged by the Revenue, therefore, it attained finality. With this finding also, suppression of fact cannot be alleged on the appellant.

++ For this reason also the extended period of demand could not have been invoked. In view of the above facts, I am of the considered view that in the present case, for the demand of period July 2005 to January 2008, the show cause notice was issued on 8.12.2009 is clearly time bar. Since the entire demand is not sustainable on the ground of time bar itself, I do not feel necessary to deal with merit of the issue on admissibility of Cenvat Credit, the impugned order is set aside.

The appeal was allowed.

(See 2016-TIOL-1441-CESTAT-MUM)