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2018 (6) TMI 1336 - AT - Central ExciseCENVAT Credit - effect of amendment dated 01.03.2011 - whether M/s Balsons Paint Industries (India) have failed to follow procedure by failing to pay an amount equal to 8% (for 2008-09 to April, 2009-July, 2009) and/or 6% (for September, 09-March, 2010 to 2010-11) of the value of exempt services, i.e. trading of raw material during the period 2008-09 to 2011-12? - Held that - It is admitted fact, that credit attributable to trading activity w.e.f. 01/04/2011 have been reversed - Also, Debit Note is a valid document for taking Cenvat credit, if it contains the relevant particulars - credit allowed - appeal dismissed - decided against Revenue.
Issues:
1. Failure to pay the amount equal to 8% or 6% of the value of exempt services. 2. Failure to maintain separate accounts. 3. Validity of debit notes as duty paying documents. 4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944. Issue 1 - Failure to pay the amount equal to 8% or 6% of the value of exempt services: The case revolved around whether M/s Balsons Paint Industries (India) failed to follow the procedure by not paying the specified percentages for trading raw materials during certain periods. The Tribunal examined the amendment dated 01.03.2011, which included 'Trading' under exempted services. The retrospective or prospective application of this amendment was crucial in determining the liability. The respondent was called upon to justify why a demand amount should not be recovered from them for failing to maintain separate accounts and for the reversal of credits. The Tribunal upheld that the Cenvat credit reversal was prospective, leading to the dismissal of the appeal. Issue 2 - Failure to maintain separate accounts: The Adjudicating Authority found that the respondent failed to maintain separate accounts as required by Rule 6(2) of the Cenvat Credit Rules, 2004. This failure led to the non-disclosure of availing Cenvat credit on input services, resulting in suppression. The Authority confirmed the demand, disallowed Cenvat credit, and imposed a penalty under Rule 15 of the Cenvat Credit Rules, 2004. The decision was supported by the precedent set in the case of Union of India Versus Rajasthan Spinning & Weaving Mills. Issue 3 - Validity of debit notes as duty paying documents: The respondent argued that trading activity could not be considered an exempted service before the 2011 amendment. The Commissioner (Appeals) partially allowed the appeal, emphasizing that the Department failed to establish contumacious conduct. The Tribunal acknowledged that the 'Debit Note' could serve as a valid document for claiming Cenvat credit if it contained relevant particulars, ultimately dismissing the Revenue's appeal. Issue 4 - Imposition of penalty under Section 11AC of the Central Excise Act, 1944: The Revenue contended that penalty imposition was justified under Section 11AC due to the failure to disclose availing of Cenvat credit, leading to suppression. The Tribunal, after considering the arguments and facts, found no merit in the Revenue's grounds of appeal. It upheld that the amendment was prospective and that the respondent had reversed credits from the specified date. Consequently, the appeal filed by the Revenue was dismissed, granting the respondent consequential benefits as per the law.
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