Tribunal grants appeal on Cenvat Credit denial for tower construction, citing time-barred demand & incorrect rule application.

The Tribunal allowed the appeal, setting aside the denial of Cenvat Credit for inputs and capital goods used in erecting towers and prefabricated buildings. The demand for unutilized credit was deemed time-barred as the show cause notice incorrectly applied Rule 3(5) instead of Rule 10. The appellant was not held liable for the untransferred credit lapse, and the impugned order was set aside on both merit and limitation grounds.

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Issues:
Appeal against denial of Cenvat Credit for inputs and capital goods used in setting up towers and pre-fabricated buildings. Interpretation of Rule 3(5) and Rule 10 of Cenvat Credit Rules. Applicability of Rule 10 in case of transfer of infrastructure. Bar on recovery of unutilized credit. Compliance with show-cause notice requirements. Limitation period for raising demand.

Analysis:
The appellant contested the denial of Cenvat Credit amounting to Rs. 87.4 crores for inputs and capital goods utilized in erecting towers and prefabricated buildings. The case involved a demerger resulting in the transfer of assets to another entity, with infrastructure remaining in place and leased back. The Revenue sought to recover unutilized credit as of the demerger date through a show cause notice issued in 2010.

During adjudication, the Commissioner differentiated between Rule 3(5) and Rule 10 of Cenvat Credit Rules. While ruling out Rule 3(5) due to no physical removal during the transfer, he invoked Rule 10 for credit transfer to the transferee, holding the appellant liable for untransferred credit lapse. The demand raised was considered time-barred, with no penalty imposed due to departmental confusion.

The appellant argued that the Commissioner exceeded the show cause notice's scope by applying Rule 10 and contended the demand was time-barred. Citing precedent, they claimed entitlement to Cenvat Credit under Rule 10(2) and sought to set aside the impugned order.

Upon review, the Tribunal found the show cause notice incorrectly applied Rule 3(5) and confirmed the demand under Rule 10, which was not invoked in the notice, rendering the demand unsustainable and time-barred. Relying on precedent, the Tribunal held that the transferor was not obligated to transfer credit under Rule 10, thus setting aside the impugned order on both merit and limitation grounds.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief, if any, based on the above analysis.

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