Tribunal overturns credit denial based on Notification, citing conflicting departmental interpretations.

The Tribunal ruled in favor of the appellant, holding that the denial of credit based on Notification No.02/14-CE (N.T.) dt.20.1.2014 was not valid. The Tribunal determined that the extended period of limitation could not be applied due to conflicting interpretations within the Revenue department, as evidenced by their appeals against decisions allowing credit to similarly placed assessees. As a result, the Tribunal set aside the denial of credit, allowing the appeal and granting any consequential relief to the appellant.

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Issues: Denial of credit based on Notification No.02/14-CE (N.T.) dt.20.1.2014, Applicability of extended period of limitation for show cause notice

The judgment revolves around the denial of credit to the appellant based on Notification No.02/14-CE (N.T.) dt.20.1.2014. The appellant, located in Jammu & Kashmir, availed the benefit of exemption under Notification No.01/10-CE dt.6.2.2010 but faced denial of credit for duty paid on inputs procured during the period from 01.8.2012 to 19.01.2014. The Revenue contended that credit was not allowable during this period for units availing exemption, and only became available post the amendment in Notification No.01/10-CE. The appellant challenged this denial, citing a case precedent supporting their entitlement to credit on inputs. The show cause notice was issued on 31.08.2017, invoking the extended period of limitation.

The appellant argued that the denial of credit was time-barred as the show cause notice was issued beyond the normal limitation period. The appellant's counsel referenced a case where similarly placed assessees were allowed credit, leading to divergent views within the Revenue department. The Tribunal noted that the Revenue had filed appeals against such decisions, indicating conflicting interpretations within the department. Considering this, the Tribunal held that the extended period of limitation could not be applied in this case due to the Revenue's inconsistent stance. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting any consequential relief.

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