2024-VIL-1196-CESTAT-ALH-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - CENVAT Credit, Input Service, Trading activity, Demand invoking extended period of limitation - Audit observed that appellant availed inadmissible CENVAT credit on invoices issued by a merchant exporter for "export facilitation fee" and "reimbursement of loss" for fulfilling the Minimum Indicative Export Quota (MIEQ) of sugar, as well as invoices issued by the U.P. Sugar Mills Cogen Association for contribution towards the installation of a "gateway system" to monitor the surplus power exported or imported by the unit - Demand of CENVAT credit on the services received from the merchant exporter by invoking extended period of Limitation -Whether the services received from the merchant exporter for fulfilling the MIEQ of sugar are eligible for CENVAT credit as "input services" - HELD - the services received from the merchant exporter are not eligible for CENVAT credit as they are in relation to the trading of goods, which is specifically excluded from the definition of "input services" under the Cenvat Credit Rules, 2004 - trade facilitation provided by the Govt to allow the MIEQ to be made tradable among sugar factories does not mean that the benefits available for sugar manufactured by the appellant in its own factory would also be available for the traded quantity of sugar procured from other sources - extended period of limitation was correctly invoked as the appellant had suppressed and misstated the facts by not disclosing the details of the services received from the merchant exporter in its returns and not sharing the tripartite agreement with the Department. The discovery of such facts during the audit, which were not available in the returns, is a case of suppression for the purpose of invoking the extended period of limitation - the imposition of penalty under Rule 15 of the CCR, 2004 read with Section 78 of the Finance Act, 1994 and Section 11AC of the CEA, 1944 is justified - Demand of CENVAT Credit in respect of the services of “Contribution for setting up Gateway System” provided by UP Sugar Mills Cogen Association, along with associated interest and penalty is set aside - Demand of CENVAT Credit in respect of the services of Merchant Exporter, along with associated interest and penalty is upheld – the appeal is partly allowed
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