Tribunal allows appeal on CENVAT credit disallowance due to limitation issues

The Tribunal allowed the appeal, setting aside the impugned order disallowing CENVAT credit on ISD invoices and invoices from Delicious Trade Links Private Limited. The Tribunal found that the subsequent Show Cause notices and demands were barred by limitation and resulted in double jeopardy and duplicity of demand, as the Revenue Department had prior knowledge of the credits. The appeal was allowed on the grounds of incorrect availment and invoking the extended period being hit by limitation.

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Issues:
1. Disallowance of CENVAT credit on ISD invoices.
2. Disallowance of credit on invoices issued by Delicious Trade Links Private Limited.
3. Double demand and duplicity of demand.
4. Barred by limitation - invoking extended period.

Analysis:

Issue 1: Disallowance of CENVAT credit on ISD invoices
The Appellant, engaged in the manufacture and sale of 'Carbon Black,' distributed CENVAT credit from its Head Office to its Durgapur unit under an ISD invoice. The Central Excise Revenue Audit found the ISD invoices defective, leading to Show Cause notices and subsequent disallowance of the credit. The Tribunal remanded the matter concerning an earlier Show Cause notice, which was pending. The Counsel argued against incorrect availment, citing judgments and double jeopardy concerns.

Issue 2: Disallowance of credit on invoices by Delicious Trade Links
A Show Cause notice was issued specifically for credit availed on invoices from Delicious Trade Links. The Appellant contended that ongoing proceedings regarding ISD invoices should prevent further disallowance, citing judgments to support the argument. The Counsel highlighted that the Revenue Department had prior knowledge of the credits, making the subsequent notice and demand barred by limitation.

Issue 3: Double demand and duplicity of demand
The Counsel argued that the ongoing proceedings and prior disallowance of CENVAT credit on ISD invoices should prevent further allegations of incorrect availment, leading to double jeopardy. The Tribunal found that the Department's subsequent Show Cause notice resulted in duplicity of demand, setting aside the impugned order and allowing the appeal.

Issue 4: Barred by limitation - invoking extended period
The Tribunal noted that the Revenue Department had prior knowledge of the facts and information regarding the credits, as evidenced by the audit and scrutiny conducted pre-2006. Despite this, the Department issued a subsequent Show Cause notice beyond the limitation period, leading to duplicity of demand and rendering the demand hit by limitation. The impugned order was set aside, and the appeal was allowed on this ground.

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