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2021 (11) TMI 780 - AT - Central ExciseCENVAT Credit - clearance of both dutiable and exempted items manufactured - non-utilization of separate inventory for input services utilized in terms of Rule 6(2) of CENVAT Credit Rules, 2004 - issue pertains to 2006-2007 - invocation of extended period of limitation - HELD THAT - Even if extended period was applicable, the show-cause-notice should have been issued by April 2012. However, the show-cause-notice was issued on 17.08.2012 that is beyond the permissible period of 5 years without the any authority of law. The appellants have submitted the same during the proceedings before the learned Commissioner. However, it is found that learned Commissioner instead of giving reasons as to how the show-cause-notice was hit by limitation simply observes that the appellant s claim that the show-cause-notice was received by them on 22.08.2007 is factually incorrect and it was a clear mis-representation of facts. The show-cause-notice clearly covers the period 2006-2007 even assuming that the Returns for the month of March 2007 are filed in the month of April 2007, the 5 years period comes to an end by April 2012. When the show-cause-notice itself is issued in August 2012 which is clearly beyond the period of limitation, even if extended by 5 years therefore, it is to be held that the show-cause-notice is clearly hit by limitation and will not survive legal scrutiny. Appeal allowed - decided n favor of appellant.
Issues:
- Availment of input service tax credit on common input services - Allegation of not maintaining separate inventory for input services - Applicability of Rule 6(2) of CENVAT Credit Rules, 2004 - Invocation of extended period for issuing show-cause notice - Legal scrutiny of the show-cause notice timeline - Decision on the appeal based on limitation Analysis: The case involved the availing of input service tax credit on common input services by the appellants, which included services like freight, insurance, clearing, forwarding, courier, security, and telephone services. The Department alleged that the appellants did not maintain a separate inventory for input services as required under Rule 6(2) of the CENVAT Credit Rules, 2004. A show-cause notice was issued on 17.08.2012, and the same was confirmed in the impugned order dated 19.02.2014. The appellants argued that they availed exemption under Notification No. 63/1995-CE for goods supplied to defense and defense projects, and only the proportionate credit attributable to inputs and input services used in the manufacture of exempted products needed to be reversed. They contended that the show-cause notice was beyond the permissible period of 5 years without any legal authority, as it was issued in August 2012 for the period 2006-2007. The appellants also cited previous cases to support their interpretation of the law and the limitation issue. The Authorized Representative for the Revenue reiterated the findings of the impugned order, while the Tribunal analyzed the timeline of the show-cause notice issuance. The Tribunal found that even if the extended period was applicable, the notice should have been issued by April 2012, but it was issued in August 2012, beyond the permissible period of 5 years without any legal authority. The Tribunal concluded that the show-cause notice was hit by limitation and would not survive legal scrutiny, thus allowing the appeal solely on the grounds of limitation without delving into the merits of the case. Ultimately, the impugned order was set aside, and the appeal was allowed with consequential relief, if any, as per the law. The decision was based on the show-cause notice being deemed legally invalid due to exceeding the limitation period, highlighting the importance of adhering to statutory timelines in legal proceedings.
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