The demand for CENVAT Credit was barred by limitation as the respondent disclosed all relevant details, and no evidence of willful misstatement or suppression was presented.

JUDGMENT :

VIJAY BISHNOI, C.J.

1. Heard Mr. S.C. Keyal, learned Senior Standing Counsel, Central Board of Indirect Taxes & Customs appearing for the appellant. Also heard Mr. G.N. Sahewalla, learned senior counsel assisted by Mr. H.K. Sarma, learned counsel for the respondent.

2. This central excise appeal is filed by the appellant/Revenue being aggrieved with the final order No. 76932/2019 dated 04.12.2019 passed by the Customs, Excise and Service Tax Appellate Tribunal (in short, CESTAT), East Regional Bench, Kolkata in Service Tax Appeal No. 76119/2014 (arising out of Order-in- Original No. 01/ST/ADJ/Commr./ Dib/14-15 dated 23.05.2014 passed by the Commissioner of Central Excise and Service Tax, Dibrugarh), whereby the appeal filed by the respondent was allowed with consequential relief and the impugned demand was set aside.

3. The appeal was admitted vide order dated 15.09.2021 passed by this Court and the following substantial question of law was framed for adjudication:

“Whether under the peculiar facts and circumstances of the case CESTAT, Kolkata was correct in holding that the demand of CENVAT Credit of Central Excise Duty utilized by the assessee was barred by limitation?”

4. The brief facts of the case are that the respondent M/s. North Eastern Cables and Conductors Private Limited (hereinafter referred to be as “the respondent Company”), having its Service Tax Registration under Jorhat Division, had provided services under the category of “Erection, Commissioning or Installation Services” to various organizations like Electricity Board etc. under the specific contract. Apart from that, the respondent Company had also supplied materials like RCC Poles, conductors, angles etc. under separate and independent contract.

5. According to the appellant, the supply of materials is not covered under the purview of Service Tax Act but the Erection, Commissioning or Installation part is liable to Service Tax. It was alleged by the appellant that the respondent Company had violated Rule 3 and Rule 6 of the CENVAT Credit Rules, 2004 (hereinafter to be referred to as “the Rules of 2004”) by availing and utilizing the CENVAT Credit of Central Excise Duty amounting to Rs.1,30,84,835.00 only on inputs used for rendering exempted service as defined under Rule 2(e) of the Rules, 2004.

6. It is not in dispute that the periodic returns ST-3 had been submitted by the respondent Company wherein the details regarding total credit, credit utilized as well as credit reversed had been mentioned.

7. On the basis of an audit objection, the Commissioner, Central Excise and Service Tax, Dibrugarh had issued a demand-cum-show-cause notice (SCN) to the respondent Company on 04.11.2013 and asked the respondent Company to show cause as to why, an amount of Rs.1,30,84,835/- wrongly utilized by it should not be demanded and recovered along with the interest. It was also mentioned as to why interest to the tune of Rs.1,19,16,571/- be not demanded and recovered from it and why penalty should not be imposed upon it.

The relevant portion of the demand-cum-show cause notice is reproduced hereunder:

“Whereas, it appears that the noticee had availed an amount of Rs.9,85,58,079.00 as Service Tax, Rs.19,71,958.00 as Education Cess and Rs.8,06,968.00 as Secondary & Higher Education Cess as Cenvat Credit of Central Excise Duty on inputs which was exclusively used for provision of exempted service, i.e. supply of materials during the period of Oct, 2009 to March, 2011. The noticee had also utilized an amount of Rs.1,27,03,718.00 as Service Tax, Rs.2,54,080.00 as Education Cess and Rs.1,27,037.00 as Secondary & Higher Education Cess out of the above amount of Cenvat Credit during the period Oct, 2009 to March, 2010 for payment of service tax on taxable service i.e. Erection, Commissioning or Installation services and the balance amount of Cenvat Credit of Rs.8,58,54,361.00 as Service Tax, Rs.17,17,878.00 as Education Cess and Rs.6,79,931.00 as Secondary & Higher Education Ces