2018 (10) TMI 1828 - AT - Central Excise

Extended period of limitation - CENVAT credit - inputs issued by the units, who are availing exemption under Notification No. 01/10-CE dt. 06.02.2010 - area based exemption - credit denied on the premise as per Notification No. 02/14-CE (N.T.) dt. 20.01.2014, the appellant was not entitled to credit prior to the Notification No. 01/10-CE dt. 06.02.2010 - period involved in this case is 2011-12 to 2013-14 whereas the show cause notice has been issued on 17.07.2015 by invoking extended period on 21.06.2017. HELD THAT - Similarly placed assessee was allowed the credit although against those orders, the appeals have been filed by the Revenue before the Commissioner (Appeals), in that circumstance, when the Revenue is having divergent views on the issue, the extended period of limitation is not applicable. Admittedly, in this case, the show cause notice has been issued by invoking the extended period of limitation, therefore, the denial of credit is barred by limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
- Denial of credit based on Notification No.02/14-CE (N.T.) dt.20.1.2014
- Applicability of Notification No.01/10-CE dt.6.2.2010 in Jammu & Kashmir
- Invoking extended period of limitation for issuing show cause notice

Analysis:

1. Denial of credit based on Notification No.02/14-CE (N.T.) dt.20.1.2014:
The appellant contested the denial of credit on the grounds that they were not entitled to credit prior to Notification No.01/10-CE dt.6.2.2010. The Revenue argued that during the relevant period of 2011-12 to 2013-14, an assessee could not avail credit against inputs issued by units benefiting from the exemption under Notification No.01/10-CE dt.6.2.2010. However, the Tribunal noted that similarly placed assessees were allowed credit, leading to divergent views within the Revenue. Consequently, the Tribunal held that the denial of credit was barred by limitation due to the extended period invoked for issuing the show cause notice.

2. Applicability of Notification No.01/10-CE dt.6.2.2010 in Jammu & Kashmir:
The appellant, located in Jammu & Kashmir, was availing the exemption under Notification No.01/10-CE dt.6.2.2010. The issue arose regarding the eligibility of the appellant to avail credit of duty paid on inputs during the specified period. The Tribunal considered the contention of the appellant in light of the specific exemption notification applicable to the region. The Tribunal's decision emphasized the need for consistency in interpreting such notifications to avoid confusion and ensure uniform application of tax laws.

3. Invoking extended period of limitation for issuing show cause notice:
The appellant raised a crucial procedural issue regarding the show cause notice issued on 17.07.2015, invoking the extended period of limitation. The appellant argued that the notice was time-barred due to the specific period involved in the case (2011-12 to 2013-14). The Tribunal examined the validity of invoking the extended period and concluded that since the Revenue itself had conflicting views on the issue, the extended limitation period was not applicable in this scenario. Therefore, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any.

In conclusion, the Tribunal's judgment highlighted the importance of consistent application of tax laws, especially concerning exemptions and credits, while also emphasizing the procedural requirements for issuing show cause notices within the prescribed limitation periods. The decision provided clarity on the denial of credit based on specific notifications and the implications of invoking extended periods of limitation in tax matters.