2017 (5) TMI 1289 - AT - Central Excise

CENVAT credit - Rule 6(3) of CCR, 2004 - whether trading is an exempt service? - N/N. 3/2011 C.E. N.T. dated 01.03.2011 - Held that - statute did not have the definition of trading as service for the period before 01.04.2011. Therefore, the definition of trading as service was not applicable to the period upto 31.03.2011. The period covered in the said SCN is upto 31.03.2011, therefore the demand is not sustainable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Notification No. 3/2011 C.E. N.T. dated 01.03.2011 regarding trading as service.
2. Applicability of Rule 6(3) of Cenvat Credit Rules, 2004 to transactions before 01.04.2011.

Analysis:
1. The case involved two appeals arising from the same impugned Order-in-Appeal. The appellant-manufacturer was issued a show cause notice alleging clearance of raw materials without availing Cenvat credit and treating it as trading activity. The Original Authority confirmed the demand and imposed a penalty, which was challenged before the Commissioner (Appeals). The Commissioner held that the Notification declaring trading as service was clarificatory and directed modification of the Order-in-Original. Both the manufacturer and the Revenue appealed to the Tribunal.

2. The appellant argued that before 01.04.2011, there was no provision in the law to treat trading as a service. The Revenue supported the grounds of appeal. The Tribunal considered the contentions and found that the statute did not define trading as a service before 01.04.2011. Therefore, the definition was not applicable to transactions up to 31.03.2011, the period covered in the show cause notice. Consequently, Appeal No. E/54591/2014 was allowed, while Appeal No. E/53649/2014 was dismissed.

This judgment clarifies the interpretation of Notification No. 3/2011 C.E. N.T. regarding trading as a service and the applicability of Rule 6(3) of Cenvat Credit Rules, 2004 to transactions before 01.04.2011. The Tribunal's decision provides a clear understanding of the legal provisions and their temporal application in the context of the case, ensuring proper adjudication based on the statutory framework in force during the relevant period.