No Allegation of Suppression of Facts or Wilful Mis-Statement when Cenvat Credit of Input Services Reflected in Monthly Return in Form of ER-1: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that the allegation of suppression of facts or wilful mis-statement will not stand when Cenvat Credit of input services are reflected in monthly return in form of ER-1.

The department is of the view that the input service availed by the appellant at the depot level has nothing to do with the manufacture of the excisable goods either directly or indirectly in or in relation to the manufacture of the final product and clearance of the final product up to the place of removal.

It has further been mentioned in the impugned show cause notice that the credit availed by the appellant is not admissible as the said services not covered under the input services as provided under Rule 2 (L) of Cenvat Credit Rule, 2004, as the same has neither been used in or in relation to manufacture of final products nor used for clearance of final product up to place of removal.

The Advocate for the appellant has submitted that there has been no suppression of the fact or misstatement or fraud as the department was fully aware about the activities of the appellant, it has been emphasized that the department has been undertaking regular audit of the appellant’s financial records. The appellant have regularly been filing their central excise returns scrutiny and the show cause notice have been issued to them only from financial records of the appellant. There has been no suppression of facts, misstatement for any other mischief with an intention to evade Central Excise Duty.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We take note of the fact that CENVAT Credit of Service Tax was availed by the appellant on the strength of proper duty paying documents and all the transaction have been mentioned in the statutory books of account maintained by the appellant. The Cenvat Credit of input services are reflected in the monthly return in the form of ER-1 of the appellant. In that circumstances we do not find any ground on the part of the department to allege suppression of facts or willful mis-statement and therefore the demand beyond normal period of limitation is certainly time barred.”

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