2017 (11) TMI 939 - AT - Central Excise

CENVAT credit - credit attributable to trading activity - Rule 6 (3) of CCR, 2004 - Held that - there is no dispute that trading activity is having no nexus with the manufacturing activity of the appellant, therefore, the said issue is no issue matter. Whether prior to 1.4.2011, the appellant was entitled to avail cenvat credit on common input services when the appellant is involved in the activity of trading as well as manufacturing? - Held that - for the period prior to 1.4.2011, the appellant is not required to either reverse of cenvat credit attributable to trading activity, or liable to pay @ 6 % of the value of traded goods. Therefore, the demand for the period prior to 1.4.2011 is set-aside. Whether the extended period of limitation is invokable or not? - Held that - the appellant was filing the regular ER-1 Returns and availment of cenvat credit was in the knowledge of the department and the case of the revenue is that the revenue came to know of the fact of trading activity to their financial records which is a public records. No other positive evidence has been brought on record by the Revenue to alleged suppression of facts on the part of the appellant - extended period not invokable - penalty also not invokable. The matter is remanded back to the adjudicating authority for correct quantification of demand for the period within limitation as per formula prescribed under Rule 6 (3) of CCR, 2004 - appeal allowed by way of remand.

Summary

Issues:
1. Denial of cenvat credit attributable to trading activity and demand of 6% of the value of trading activity.
2. Entitlement to avail cenvat credit on common input services for the period before 1.4.2011.
3. Invocability of the extended period of limitation.

Analysis:
1. The appellant appealed against an order denying cenvat credit related to trading activity and demanding 6% of the trading value. The appellant availed credit on common services for both manufacturing and trading activities. The issue was whether the appellant could avail credit for trading activity. The appellant argued against the denial on three grounds. The Revenue supported the impugned order. The Tribunal found no nexus between trading and manufacturing activities, resolving this issue.

2. The next issue was whether the appellant could avail cenvat credit on common input services before 1.4.2011 while engaging in trading and manufacturing. The Tribunal referred to Notification No. 03/2011-CE (NT) and a previous case to determine that trading was not an exempted service before 1.4.2011. Thus, the appellant was not required to reverse cenvat credit or pay 6% of traded goods' value for this period, setting aside the demand.

3. The final issue was the invocability of the extended period of limitation. The Revenue claimed suppression of facts, but the Tribunal found no positive evidence supporting this. Citing a previous case, the Tribunal held that the extended period was not invokable. The calculation of demand was found incorrect, leading to a remand for proper quantification within the limitation period. As the extended limitation period was not applicable, no penalty was imposed on the appellant, and the appeal was disposed of accordingly.