2018 (10) TMI 464 - AT - Central Excise

CENVAT Credit - input service availed for trading activities as well as export activities - Rule 6(3) of Cenvat Credit Rules - extended period of limitation invoked - Held that - The impugned order is set aside and matter remanded so as to enable the assessee to reverse the proportionate credit availed in respect of input services utilized for trading purposes - The appellant s plea that export is not an exempted service and as such there is no requirement for reversal of any credit as also the plea of limitation is kept open for Adjudicating Authority to re-decide - appeal allowed by way of remand.

Summary

Issues:
- Interpretation of Rule 6(3) of Cenvat Credit Rules
- Application of longer period of limitation
- Reversal of proportionate credit for input services used in trading activities
- Exemption of export services from credit reversal

Analysis:
The judgment pertains to a case where the appellant, engaged in manufacturing, trading, and exporting wire, availed input service credit used in all three activities. The Revenue alleged that common input services were utilized for both dutiable and exempted trading services, invoking the longer period of limitation under Rule 6(3) of the Cenvat Credit Rules. The impugned order confirmed the demand and imposed a penalty based on this contention.

In response, the appellant cited a previous Tribunal ruling in their favor for a similar issue, where demands were set aside after proportionate credit reversal. They expressed willingness to reverse the credit if directed. The Advocate for the appellant highlighted Final Order No. 52311/2018 in their case as precedent for this argument.

The Adjudicating Authority did not oppose the appellant's request to reverse the credit. Consequently, the presiding Member, Mrs. Archana Wadhwa, set aside the impugned order and remanded the matter. The appellant was instructed to reverse the proportionate credit related to input services used for trading activities. The judgment kept open the appellant's plea that export services are not exempted, thus requiring no credit reversal. Additionally, the plea regarding limitation was left for the Adjudicating Authority to re-decide. Ultimately, the appeal was allowed through remand, providing the appellant an opportunity to address the credit reversal issue.