2018 (3) TMI 756 - AT - Central Excise

CENVAT credit - case of the department is that appellant are engaged in the trading business also, therefore services on which credit was availed were used commonly in relation to the manufactured goods as well as trading goods - Held that - when the Ld. Commissioner has allowed the Revenue s appeal on the ground that no documentary evidence have been produced by the appellant to justify their claim of non availement of credit. In my view in this situation, Ld. Commissioner should have called for documentary evidence or remanded the matter to the adjudicating authority for verification. Matter needs to be re-considered as regard the claim of the appellant that they have not availed the Cenvat credit in respect of services used for trading activity - appeal allowed by way of remand.

Summary

Issues: Admissibility of Cenvat credit for services used in trading activity.

Analysis:
The appellant, engaged in the manufacture and sale of excisable goods, availed Cenvat credit for various services like transport, banking, courier, business auxiliary, telecom, and advertising services. The department contended that since the appellant was also involved in trading, the services for which credit was claimed were used for both manufacturing and trading activities, making the credit for trading activity inadmissible. The adjudicating authority initially dropped the demand, but the Commissioner (Appeals) allowed the Revenue's appeal due to the lack of documentary evidence supporting the appellant's claim of not availing credit for services used in trading. The appellant challenged this decision.

The appellant argued that they did not avail Cenvat credit for services used in trading, as evidenced by maintaining a separate warehouse for trading activities. The Revenue, however, supported the Commissioner's decision, emphasizing the absence of documentary evidence from the appellant to substantiate their claim. The Tribunal noted the lack of documentary evidence but found fault with the Commissioner's failure to either request such evidence or remand the matter for verification. Consequently, the Tribunal deemed it necessary to re-examine the appellant's claim regarding the non-availment of Cenvat credit for services used in trading. The Tribunal directed the appellant to submit all relevant documents, with the adjudicating authority tasked to verify the claim and issue a fresh order after providing the appellant with a personal hearing. The appeal was allowed, remanding the matter to the Adjudicating Authority for further consideration.