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TMI Blog2024 (12) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged to used both for trading activities and manufacture of the goods have been brought out. The basic quest which requires to be examined before invoking Rule 6 of The CENVAT Credit Rules, 2004 is that there should be common inputs/ input services used for manufacture of dutiable and exempted goods or for the provision of both taxable and exempted services. There are nothing recorded in the impugned order to the usage of common services for trading activities and manufacture of dutiable goods. No evidence has been adduced in the show cause notice to establish the usage of common services for the provision of taxable and exempted service or for the manufacture of dutiable and exempted goodsit is not required to even remand this matter, for examination in light of the documents submitted. Extended period of limitation - penalty - HELD THAT:- As there are no merits in the demand made, no finding recorded on the issue of limitation raised by the appellant in the appeal. As demand is itself set aside the penalty imposed set aside. Conclusion - The absence of any finding to the effect of common services usage invalidates the demand under Rule 6(3) of the CENVAT Credit Rules, 2004. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to 6% of value of exempted goods and exempted services. That as per explanation 1(c) under rule 6(3D) of the CCR 2004 in case of trading, the value of exempt service shall be the difference between the sale price and the cost of goods sold (determined as per generally accepted accounting principles without including the cost of expenses incurred towards the purchases) or the ten percent of the cost of goods sold, whichever is more. 2.4 Note 4.5 of the profit loss account of the party for FY 2013-14 shows income from services rendered at Rs.78,22,534/-.The party was engaged in providing taxable (BAS) and exempted services (trading) during the year 2012-13 to 2015-16 and traded goods, but the party neither maintained separate records nor paid any amount in compliance of Rule 6(3) of the CCR. 2.5 On enquiry appellant intimated vide letter dated 01.08.2016 that they were maintaining separate records of traded goods for this purpose. The party provided ledger of purchase accounts, sales accounts and freight for FY 2012-13 in respect of trading. They submitted that the amount of freight paid in various activities such as freight on raw material, coal, consumable store and trading and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to be invokable and amount of Rs.2,81,86,611/-(Rupees two crore eighty one lakh eighty six thousands six hundred eleven only)appear to be demandable and recoverable from the party. interest at the appropriate rate on the said amount is chargeable and recoverable from the party under Section 11AA of the CEA, 1944. 2.10 By their acts of omission and commission appellant rendered themselves liable to penal action under Rule 15 of the CCR, 2004 read with Section11AC of the CEA, 1944 2.11 A show cause notice dated 19.04.2017 asking the appellant to show cause as to why:- (i) Amount of Rs.2,81,86,611/- (Rupees two crore eighty one lakh eighty six thousands six hundred eleven only) not paid (as per provision of Rule 6(3) of CCR 2004) by them should not be demanded and recovered from them under Section 11 A of Central Excise Act 1944 (hereinafter referred to as the Act)read with Rule 14 of the Cenvat Credit Rules, 2004 (hereinafter referred to as the CCR) by invoking extended period under Section 11 A(4) of the Central Excise Act, 1944; I (ii) Interest at the appropriate rate should not be charged and recovered from them under Section 11 AA of the Finance Act, 1994; (iii) Penalty under R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 (T-Del)] affirmed at [2014 (310) ELT 441 (ALL)] Triveni Engineering Indutries Ltd. [2015 (317) ELT 408 (ALL)] Pushpam Pharmaceuticals Company [1995 (78) ELT 401 (SC)] Punjab Laminates Pvt. Ltd. [2006 (202) ELT 578 (SC)] Chemphr Drugs and Liniments [1989 (40) ELT 276 (SC)] Ashirvad Eneterprise Ltd. [2013 (288) ELT 172 (Patna)] Nestle India Ltd. [2009 (235) ELT 577 (SC)] Penalty and Interest is not imposable 3.3 Authorized representative reiterated the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 Impugned order records the findings as follows: 6.1 .. 6.2 That in this connection, it is necessary to visit the provisions of Rules 6 of the CCR, 2004 which reads as under- RULE 6. Obligation of a manufacturer or producer of final products and a provider of output service. (1) The CENVAT credit all not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for- (a) the receipt, consumption and inventory of inputs used-----. (i) in or in relation to the manufacture of exempted goods (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services (i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance up to the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (i) and (iv) of clause (a) and input services under sub- clauses (if) and (iv) of clause (b).] (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as exempted services it may happen that same inputs/ input services are partially used in taxable service and partially used in exempted service, then in such the service provider has the following four options (1) Maintain separate inventory and accounts of receipts and used of input and input services used for exempted out-put services; (2) Pay an amount equal to 6% of the value of the exempted services; (3) Pay an amount equal to proportionate CENVAT credit attributable to exempted out-put services as provided under Rule 6(3A) of CCR 2004; and (4) Maintain separate accounts for input and pay amount as determined under Rule 6(3A) in respect of input services 6.5. That it is also relevant to see that exempted service as per provisions of Rule 2(e) of the CCR, 2004 means (i) Taxable service which is exempt from whole of the service tax livable thereon; or (ii) Service on which no service tax is livable under Section 66B of the Finance Act, 1994; or (iii) Taxable service whose part of value exempted on the condition that no credit of inputs and input services used for providing such taxable service shall be taken. 6.6. That even prior to 01.07.2012 as per explanation appended to Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. The contention of the party is totally mis-placed as Rule 6(2) of the CCR, 2004 relevant for the purpose of the present case provides that where the provider of out-put service availed CENVAT credit in respect of any input services and provides such output services which are chargeable to tax as well as exempted service then the provider of output service shall maintain separate account for (b) the receipt and use of input services- (i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance up to the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (i) and (iv) of clause (a) and input services under sub- clauses (i) and (iv) of clause (b).] 6.10 That the party has failed to maintain separate account as provided in the Rule mentioned above. Maintenance of sale and purchase ledger in respect of trading cannot be said as proper documents required to be maintained in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 2,81,86,611.00 is recoverable along with interest as provided under Section 11AA of the Act 6.13 In so far as the contention of the party that show cause notice is barred by limitation inasmuch as CERA audit conducted from 30.05.2014 to 20.06.2014 and the CERA audit report was duly acknowledged by the Department on 25.07.2014 , but the show cause notice has been issued on 19.04.2017 after passing of more than two and half year after coming the facts in the knowledge of the Department. In this regard it is stated that statutory period of five year is available to the department irrespective of the date when suppression came to the knowledge of the department. Statutory period of five years cannot be curtailed. In this regard the Hon'ble Tribunal in the case of NTPC Ltd Vs. Commissioner of Central Excise Raipur held in para 12 as under: The appellant has claimed that the Show Cause Notice is time barred. Since, the same has been issued more than one year from the date in which the appellant intimated the audit party vide their letter dated 8.12.2007 giving the details of the activity undertaken by them for BALCO. Hon'ble Gujarat High Court in the case of Neminath Fabric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in respect of traded goods have been less than Rs 750/- for every consignment and is well within the exemption limits. 4.5 We find that all these documents were either not produced before the adjudicating authority or adjudicating authority has not recorded any findings on any of these documents in the impugned order. The fact that these documents show is that trading activities were undertaken by the appellant from separate premises located at Kanpur, and separate accounts were maintained for the trading activities undertaken. 4.6 Neither in the show cause notice nor in the impugned order we find that the manner of usage of the services alleged to used both for trading activities and manufacture of the goods have been brought out. The basic quest which requires to be examined before invoking Rule 6 of The CENVAT Credit Rules, 2004 is that there should be common inputs/ input services used for manufacture of dutiable and exempted goods or for the provision of both taxable and exempted services. We do not find any finding recorded in the impugned order to the usage of common services for trading activities and manufacture of dutiable goods. 4.7 In absence of any finding to this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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