Tribunal grants appeal for CENVAT credit on trading activities, citing compliance with Rule 6(3A).

The Tribunal allowed the appeal, setting aside the Commissioner's decision to reject the appellant's claim for CENVAT credit on common input services used for trading activities. The Tribunal found that the appellant had maintained separate records for inputs used exclusively in manufacturing and trading, did not avail credit for trading activities, and complied with Rule 6(3A) of the CENVAT Credit Rules. The Tribunal held that the non-filing of intimation under Rule 6 was a procedural irregularity that did not hinder credit reversal, ultimately ruling in favor of the appellant.

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Issues:
Appeal against rejection of CENVAT credit on common input services used for trading activities.

Analysis:
The appellant, engaged in manufacturing excisable goods and providing taxable output services, faced a dispute regarding availing CENVAT credit for common input services used for trading activities. The Department alleged that the appellant was availing credit on input services used for trading, triggering a show-cause notice. The Original Authority upheld the demand, imposing penalties. The appellant contended they maintained separate records for inputs exclusively used in manufacturing and trading. The appellant argued they did not avail credit for trading activities, complying with Rule 6(3A) of CENVAT Credit Rules. The Commissioner rejected the appeal, leading to the present appeal.

The appellant argued that the impugned order failed to consider facts and law. They had informed the Department about not availing credit for trading activities. The appellant claimed proportionate credit for manufacturing dutiable goods and followed Rule 6(3A) for common input services related to dutiable activity. The Commissioner's rejection based on non-filing of intimation under Rule 6 was challenged. The Tribunal noted the appellant's intimation to claim CENVAT on common input services and compliance with Rule 6(3A). Referring to precedents, the Tribunal held non-filing of intimation as a procedural irregularity not hindering credit reversal. It clarified that payment under Rule 6(3)(i) did not apply when credit on exempted goods was reversed. The Tribunal found the appellant did not avail credit for trading/exempted services, supported by the intimation letter and calculations. Consequently, the Tribunal set aside the impugned order, allowing the appeal.

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