2019 (2) TMI 559 - AT - Central Excise

CENVAT Credit - invoices which were beyond six months of the date thereof - common inputs services used by the appellant in manufacture as well as the trading activities. Denial on the ground that the credit has been taken on the invoice which were beyond six months - Held that - It is observed that limitation of six months was introduced only in the year 2014 as is apparent from the Notification No. 21 dated 11.07.2014. It is also apparent that there was several confusion prevailing due to the said introduction in the statute and there was a clarification in this regard as is apparent from Circular No. 990 of 19.11.2014 not only this the period of six months got enhanced to one year vide a subsequent Notification No. 6/2015 dated 01.03.2015. The appellant no doubt has taken the cenvat credit beyond six months but within the one year of the requisite invoices - The benefit of the above discussed confusion has to be extended in favour of the assessee. Denial that the appellant was involved in manufacturing as well as trading activities, as such, was not entitled to take entire credit on the common input/ input services - extended period of limitation - no suppression of facts - Held that - While issuing the impugned SCN the factum of availing the cenvat credit by the appellant on the common input/ input services was very much in the notice of the Department. It was also in their notice that while taking the said credit invoice of the period prior six months was used by the appellant. In such circumstances, the allegation of suppression of facts on part of the appellant is not at all sustainable, based whereupon, the extended period of limitation has been invoked vide this SCN - SCN is abrred by time. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on invoices beyond six months
- Availment of common input services credit for both manufacturing and trading activities
- Reduction of penalty by Commissioner(Appeals)
- Time-barred SCN

Availment of cenvat credit on invoices beyond six months:
The appellant availed cenvat credit on invoices beyond six months, leading to a proposal for disallowance by the Department. The appellant argued that the limitation was debatable due to subsequent clarifications and extensions, and they had informed the Department about availing service tax credit. The Tribunal noted the confusion surrounding the limitation period introduced in 2014 and the subsequent extension to one year in 2015. The Tribunal held that the appellant's credit within one year of the invoices should be allowed, emphasizing that substantive benefits cannot be lost due to procedural lapses.

Availment of common input services credit for both manufacturing and trading activities:
The Department disallowed the appellant's cenvat credit on common input services used for both manufacturing and trading activities. The Tribunal referred to case law and ruled that trading was included as an exempted service, making the appellant liable to follow Rule 6(3) of Cenvat Credit Rules, 2004. The Tribunal upheld the decision that the appellant was not entitled to take the entire credit and should proportionately reverse the credit for trading activities.

Reduction of penalty by Commissioner(Appeals):
The Commissioner(Appeals) partially allowed the appeal by reducing the penalty imposed on the appellant. However, the Tribunal found the invocation of penalty unjustified and held that the penalty reduction did not absolve the appellant of liability. The Tribunal emphasized that the penalty issue was unrelated to the time-barred SCN issue.

Time-barred SCN:
The Tribunal analyzed the timeline of events and found that the demand raised through the SCN for the year 2014-15 was beyond the period of one year. It was noted that the appellant had informed the Department about the credit taken for the period in question prior to the SCN issuance. The Tribunal held that the SCN was time-barred, citing case law and emphasizing that the Department was aware of the relevant facts, making the allegation of suppression of facts unsustainable. The Tribunal set aside the adjudication arising from the time-barred SCN, allowing the appeal.