Tribunal allows Cenvat Credit on 'Input Services' but upholds inadmissibility based on court judgment.

The tribunal found that the appellant was eligible for Cenvat Credit on 'Input Services' used in the residential colony but acknowledged inadmissibility based on a court judgment. The demand for the period prior to April 2011 was held not sustainable due to no suppression of facts. The penalty imposed under Rule 15(2) of CCR, 2004 was deemed unsustainable as there was no suppression of facts. The appeal was partly allowed, confirming duty and interest for the period April 2011 to August 2011.

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Issues:
1. Eligibility of Cenvat Credit on 'Input Services' used in the residential colony.
2. Barred by limitation - period prior to April 2011.
3. Imposition of penalty under Rule 15(2) of CCR, 2004.

Eligibility of Cenvat Credit on 'Input Services' used in the residential colony:
The appellant, engaged in manufacturing fertilizers and chemicals, availed Cenvat Credit on various 'Input Services' such as manpower supply, construction work, etc. A demand notice was issued for recovery of the credit amount. The Ld Advocate acknowledged inadmissibility of credit based on a judgment but argued that a portion of the demand was barred by limitation. The tribunal found that the appellant did not dispute the inadmissibility of credit on services used in the residential colony, citing a relevant court judgment. However, the tribunal agreed with the appellant's argument regarding the limitation period before April 2011, stating that no suppression of facts occurred, and the extended period of limitation could not be invoked. The demand was found maintainable for the normal limitation period, and the penalty imposed for suppression of facts was deemed unsustainable.

Barred by limitation - period prior to April 2011:
The Ld Advocate contended that the demand for the period prior to March 2011 was barred by limitation as no show cause notice was issued despite an objection raised during an audit in 2008. The tribunal agreed with this argument, stating that there was no suppression of facts by the appellant regarding the eligibility of Cenvat Credit on the 'Input Services' during that period. Citing a Supreme Court decision, the tribunal held that the extended period of limitation could not be invoked in this case. The demand for the period April 2011 to August 2011 was found to be payable along with interest, but the penalty imposed under Rule 15(2) of CCR, 2004 was deemed unsustainable.

Imposition of penalty under Rule 15(2) of CCR, 2004:
The tribunal noted that the penalty had been imposed under Rule 15(2) of CCR, 2004 alleging suppression of facts. However, based on the findings related to the limitation period and the absence of suppression of facts, the tribunal deemed the penalty unsustainable. Consequently, the impugned order was modified to confirm duty and interest for the period April 2011 to August 2011, and the appeal was partly allowed to that extent.

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