2019 (5) TMI 1616 - AT - Central Excise

CENVAT Credit - input service - cost of transportation for clearance of their goods from the factory to the premises of their buyer - place of removal - period in question May/June 2010 to December 2012 - Extended period of limitation - penalty - HELD THAT - The appellant is entitled to Cenvat Credit - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT . Extended period of Limitation - HELD THAT - The present matter arising from the subsequent show cause notice on the same issue the extended period of limitation is not available to Revenue as there is no case of suppression etc made out - Admittedly show cause notice states that same arises pursuant to audit. We find that similar show cause notice was issued previously also. CENVAT Credit - HELD THAT -The appellant is liable to reverse cenvat credit only for the normal period of limitation which is July 2012 to December 2012 as the show cause notice is served on 18 July 2013 and the appellant has filed return for the month of June 2012 on 9th July 2012 - penalty imposed is also set aside. The appellant is directed to file a calculation of the amount they are required to reverse by way of Cenvat Credit before the Original Adjudicating Authority and Commissioner shall verify the same and if any discrepancy is pointed out and the appellant shall accordingly act - appeal allowed by way of remand.

Summary

Issues:
- Correctness of taking cenvat credit on transportation cost for goods clearance.
- Interpretation of Rule 2(l) of the Cenvat Credit Rules.
- Entitlement to cenvat credit on outward transportation.
- Applicability of extended period of limitation.
- Precedents set by previous judgments.
- Consideration of divergent opinions from different benches.

Analysis:
1. The main issue in this appeal was whether the appellant, a manufacturer of various products, correctly claimed cenvat credit on the transportation cost for clearing goods to the buyer's premises. The show cause notice was issued based on an amendment in Rule 2(l) of the Cenvat Credit Rules, which changed the provision from "from the place of removal" to "up to the place of removal."

2. The Board Circular dated 23rd August, 2007 clarified that a manufacturer could claim cenvat credit on outward transportation up to the point where the property in the goods is transferred, such as till the door of the buyer. The Revenue alleged that the appellant had suppressed information regarding irregular credit during an audit, leading to the invocation of the extended period of limitation for issuing the show cause notice.

3. The appeal had a history where a previous decision favored the appellant, following a precedent order and referring to decisions of the Hon'ble Karnataka High Court. However, the Revenue appealed to the Hon'ble Rajasthan High Court, which remanded the matter back to the Tribunal to consider the issue on merits, limitation, and penalty.

4. During the hearing, the appellant's advocate presented additional evidence in the form of invoices, indicating that transport charges were separately mentioned and not included in the transaction values. The appellant conceded that they might not be entitled to cenvat credit on merits but argued based on divergent opinions and previous judgments that supported their claim.

5. The Tribunal held that the extended period of limitation was not applicable to the Revenue as there was no suppression evident, especially since a similar show cause notice had been issued previously. The appellant was directed to reverse cenvat credit only for the normal limitation period and the penalty imposed was set aside.

6. Finally, the appellant was instructed to calculate the amount they needed to reverse as cenvat credit, which would be verified by the Original Adjudicating Authority. Any discrepancies found were to be rectified by the appellant accordingly.