Tribunal allows cenvat credit beyond time limit but directs reversal for mixed activities

The Tribunal allowed the appellant's cenvat credit availed on invoices beyond six months, emphasizing that substantive benefits cannot be lost due to procedural lapses. However, the appellant was directed to proportionately reverse the credit for trading activities due to common input services being used for both manufacturing and trading activities. The Tribunal found the penalty reduction by the Commissioner(Appeals) unjustified and unrelated to the time-barred Show Cause Notice (SCN) issue, ultimately setting aside the adjudication arising from the time-barred SCN, allowing the appeal.

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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.

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