2021 (7) TMI 705 - AT - Central Excise

CENVAT Credit - credit denied on the premise as per N/N. 02/14-CE (N.T.) dt.20.1.2014, the appellant was not entitled to credit prior to the N/N. 01/10-CE dt.6.2.2010 - extended period of limitation - HELD THAT - Reliance placed in the case of DHARMPAL SATYAPAL LTD. VERSUS COMMISSIONER OF C. EX., NOIDA 2016 (9) TMI 1389 - CESTAT ALLAHABAD , the appellant is entitled to take credit on the inputs. 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 SCN 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: Denial of credit based on Notification No.02/14-CE (N.T.) dt.20.1.2014 and extended period of limitation for issuing show cause notice.

Denial of Credit based on Notification No.02/14-CE (N.T.) dt.20.1.2014:
The appellant, located in Jammu & Kashmir, availed exemption under Notification No.01/10-CE dt.6.2.2010 but faced credit denial for duty paid on inputs during 01.10.2012 to 19.01.2014. The Revenue contended that during this period, credit against inputs issued by units availing exemption was not allowed until Notification No.02/14-CE (N.T.) dt.20.1.2014 amended the situation. The appellant challenged the denial, citing a case where similar credit was allowed to another assessee. The Revenue argued based on the Commissioner (Appeals) findings and appeals filed against similarly placed assessees in Jammu & Kashmir.

Extended Period of Limitation for Issuing Show Cause Notice:
The show cause notice was issued on 23.10.2017, invoking the extended period of limitation. The appellant's counsel highlighted the period involved (01.10.2012 to 19.01.2014) and referenced a case supporting credit entitlement. The Tribunal noted divergent views within the Revenue, evident from appeals filed against similar cases. Given the conflicting positions, the Tribunal held that the extended limitation period could not apply. Consequently, the denial of credit was deemed time-barred, leading to setting aside the impugned order and allowing the appeal with any consequential relief.

This judgment emphasizes the importance of consistency in Revenue's views on issues affecting assessees, particularly regarding credit entitlement under specific notifications. It also underscores the significance of adhering to limitation periods for issuing show cause notices to maintain procedural fairness and prevent arbitrary denials of rights to assessees.