TMI Blog2024 (2) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the said period was not barred for from taking credit but was only barred utilizing it. Further an assessee would be free to utilize remaining 80% in the subsequent financial year. Similar view was considered by the Tribunal in the case of M/s Tinna Oils and Chemicals Ltd. [ 2020 (2) TMI 1441 - CESTAT HYDERABAD] . It was observed that the Tribunal post 01.04.2008 the said provision restricting the utilization of credit was amended and the bar of utilizing credit was omitted. After such lapse of time it did not make any difference whether the asssessee had utilized the credit in excess of 20% prior to 01.04.2008 and therefore the demand was set aside. In the present case the SCN has been issued in this regard for the period 2007-08. After such lapse of time, the demand raised alleging that the assessee has utilized in excess of 20% prior to 01.04.2008 appears to be purposeless as the assessee would be eligible to utilize the entire credit in subsequent financial years - the order passed by the Original authority dropping the demand does not require any interference. This issue is found in favour of the assessee and against the Revenue. Consequently, the appeal filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has failed to establish the allegation of suppression of facts with intent to evade payment of duty against the assessee so as to invoke the extended period. The show cause notice issued beyond the normal period cannot sustain and requires to be set aside. The issue on limitation is answered in favour of assessee and against the department - The Tribunal in the case of M/s Musaddilal Projects LTD. [ 2017 (4) TMI 951 - CESTAT HYDERABAD] observed that when the assessee has filed returns regularly disclosing details of credit, the demand cannot be raised invoking the extended period alleging suppression of fact. The impugned order confirming the demand, interest and penalties on second issue for Rs. 72,18,1957/- is modified as above by limiting the demand and interest to the normal period. The appeal filed by the assessee is partly allowed. - HON'BLE MEMBER (JUDICIAL), MS. SULEKHA BEEVI C.S. And HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Shri Amal Dave, Advocate for the Appellant-Assessee Shri, R K Agarwal Superintendent (AR), for the Respondent Revenue ORDER Per: MS. SULEKHA BEEVI C. S. Both these appeals arise out of the same impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the exempted goods as provided under Rule 6(3A) (i) of the Cenvat credit Rules, 2004. 1.4 Again, during the period up to 2008 as per Rule 6(3)(c), the assessee could utilise only 20% of the Cenvat credit when they are engaged in providing both taxable as well as exempted services. In the present case, assessee had utilised excess of 20% of Cenvat credit which was against the provisions of law. 1.5 Accordingly, show cause notice was issued proposing to disallow and recover the wrongly availed credit as well as the credit utilised in excess of the permissible limit of 20% along with interest and for imposing penalties. After due process of law, the Original Authority vide order impugned herein confirmed the duty of Rs. 72,18,957/- being the wrongly availed credit in respect of common input services used for taxable and exempted services (trading). The Original Authority, however, dropped the demand of Rs. 59, 32, 265/- proposed in the SCN to be recovered for utilizing in excess of 20% for the period 2007-08. Penalties were imposed under Section 77 and 78 of the Financial Act, 1994. Aggrieved by such order, the assessee is now before the Tribunal. 2. The Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea. The activity of generating electricity by use of windmills was under taken in Tamil Nadu. The department has not established that such input services were actually used for generation of electricity in Tamil Nadu. The allegations in the show cause notice has to be proved by the department. In the impugned order, the Commissioner has rendered a finding that because the assesse was maintaining common profit and loss account for both activities, the plea that the input services were not used commonly for generating of electricity and sale of salt cannot be accepted. It is argued by the Learned Cousnel that the said findings is erroneous in as much as maintaining common profit and loss account has nothing to do with the availment of input services and their utilization thereof. The original authority has erred in observing that assesse has failed to demonstrate by furnishing documents that such common input services were not used for the activity of generating electricity at Tamil Nadu and that these were exclusively used for taxable output services at Gandhidham. 3.1 The Learned Counsel argued on the ground of limitation also. It is submitted that the show cause notice is issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture/ sale of electricity. Since, the demand in the show cause notice is arrived at on the basis of excess of 20% utilization of Cenvat credit, the dropping of the entire demand on this score on the mere observation that assessee is engaged in sale of raw salt is erroneous and requires to be set aside. It is prayed that the said demand may be confirmed. 4.2 In regard to the appeal filed by the assessee on confirmation of demand of service tax of Rs. 72,18,957/-, it is submitted by the Learned AR that the assesse has used common input services for both taxable services and exempted services (activity of trading). With effect from 01.04.2011 an explanation has been added in the definition of exempted services by which trading is also an exempted service. The activity of manufacture/ sale of electricity at Tamil Nadu as well as the sale of raw salt are trading activities of the assessee. The input services in the nature of Mobile phone services, ,Travel service, Bank Commission, maintenance repairs of offices, Courier services are input services, which are in the nature of being commonly used for taxable output service as well as trading activities. The main argument of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om taking credit but were only barred from utilizing it. They were free to utilize remaining 80% in the immediate next financial year. Therefore, the demand on this ground does not sustain. As several years have passed, the assessee would have been entitled to utilize the credit subsequent to the period in question and therefore the demand on this ground needs to be set aside and we do so. 5.2 Similar view was considered by the Tribunal in the case of M/s Tinna Oils and Chemicals Ltd. (supra). It was observed that the Tribunal post 01.04.2008 the said provision restricting the utilization of credit was amended and the bar of utilizing credit was omitted. After such lapse of time it did not make any difference whether the asssessee had utilized the credit in excess of 20% prior to 01.04.2008 and therefore the demand was set aside. The relevant Para reads as under :- 3. The assessee herein is engaged in providing Cargo Handling Service , Port Service , Clearing and Forwarding Agent Service and Storage Warehousing Service and are registered with the Central Excise Department. The department gathered intelligence that the assessees were (i) not paying service tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of 80% prior to 1-4-2008 or post this date. In view of the above, we find that the demand on this accounts needs to be dropped and we do so. 14. In view of the above, we pass the following order : (i) The assessee is not liable to pay service tax under Storage Warehousing Services on the service charges which they have received for stevedoring/cargo handling. (ii) They are liable to pay service tax on storage and warehousing charges of any amount received on account of storage of goods by warehousing charges ground rent or any type of rent, etc. (iii) The assessee is liable to pay interest as applicable on the above amount. (iv) The demand on account of denial of Cenvat credit is set aside. (v) All penalties are set aside. 5.3 In the present case the SCN has been issued in this regard for the period 2007-08. After such lapse of time, the demand raised alleging that the assessee has utilized in excess of 20% prior to 01.04.2008 appears to be purposeless as the assessee would be eligible to utilize the entire credit in subsequent financial years. Following the ratio laid in the above decisions, we are of the opinion that the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has disclosed the entire credit availed as well as their income earned by generation of electricity and sale of salt, in their accounts and financial statements. The show cause notice does not allege any particular transaction/figure has been suppressed by the assessee with intent to evade the payment of service tax. In Para 7 of the show cause notice it is stated that as per the records of the assessee, the department has arrived at the excess utilization of credit for the period 2007-08. So also the demand on availment of common input services has been raised on the basis of account of the assessee. All these lead to the probable conclusion that the assessee has disclosed all the transactions in their accounts and has not willfully suppressed any facts with intent to evade payment of service tax/duty. There is no positive act of suppression established by the department against the assessee so as to invoke the extended period. 6.2 The Tribunal in the case of M/s Musaddilal Projects LTD. (Supra) observed that when the assessee has filed returns regularly disclosing details of credit, the demand cannot be raised invoking the extended period alleging suppression of fact. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination of the material was done, it was realised that the respondent-assessee had availed Cenvat credit on the services of all the three categories. The respondent-assessee has rightly pointed out that all the service providers charge the service tax on all the three services and such services since were rendered at the port of export, which was the place of removal, the services were in relation to manufacturing activities as far as the first two services are concerned. However, insofar as the third service where this Court has held in favour of the Revenue and against the respondent-assessee, we are of the opinion that the extended period of limitation would not be available to the Revenue in absence of any material to indicate suppression on the part of the respondent-assessee. It is not in dispute that there was no suppression nor any misrepresentation in respect of Cenvat credit availed by the respondent-assessee in respect of these services. 13. Resultantly, the question of law is answered in the above manner. Appeal is disposed of accordingly. There shall be, however, no order as to costs. 6.4 The Hon ble High Court of Madhya Pradesh at Indore, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the part of the respondent-assessee. It is not in dispute that there was no suppression nor any misrepresentation in respect of Cenvat credit availed by the respondent-assessee in respect of these services. 7. In the aforesaid case also, the availment of credit was discovered during the course of audit when detailed examination of material was done. 8. In the present case, there was no suppression or misrepresentation in respect of availment of CENVAT credit and, therefore, this Court is of the considered opinion that in the light of the judgment delivered by the Division Bench of Gujarat High Court, the Tribunal was justified in remanding the matter back and holding that mandatory equal penalty and extended period of 5 years are not attracted. The High Court of Karnataka in the case of Commissioner of Central Excise. Bangalore v. Sanmar Speciality Chemicals Ltd., reported in 2016 (43) S.T.R. 347 (Kar.) in paragraphs 7 and 8 has held as under : 7. It is an admitted fact that the input tax credit was claimed in the return of the assessee from time to time and therefore, it was not a matter for suppression of facts, as sought to be canvassed on behalf of the ..... 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