2018 (8) TMI 85 - AT - Central Excise

Tribunal allows reversal of Cenvat Credit beyond time limit, remands quantification to Adjudicating Authority

The Tribunal set aside the demand beyond the limitation period, considering the appellant's bona fide intentions as penalty was previously set aside. The ... CENVAT Credit - common input services used in manufacture of excisable goods as well as in providing trading activities - Rule 6(3) of the Cenvat Credit Rules - extended period of limitation - penalty - Held that:- The learned Commissioner (Appeals) upheld the part demand but set aside the penalty imposed upon appellant and Revenue is not in appeal against that part of the impugned order - The circumstances for imposition of penalty as also for the invocation of extended period are identical inasmuch as both pre-suppose a mala fide mind with intention to evade payment of duty. It is well settled that if penalty has been set aside, thus leading to believing the bona fide of the appellant, the normal period of limitation would not be available to the Revenue - the demand raised beyond the normal period of limitation is not justified, the same is set aside. However, a part of a demand would fall within the limitation period and the learned advocate has given undertaking to reverse the proportion Cenvat Credit in respect of common services, so utilized by them - matter remanded for the purpose of quantification of the amount of credit required to be reversed by appellant. Issues:1. Availing Cenvat Credit on common services for manufacturing excisable goods and trading activities.2. Demand raised by the Revenue for reversal of specific amount of traded goods.3. Impugned order by Commissioner (Appeals) upholding demand and interest but setting aside penalty.4. Appeal challenging the impugned order on the point of limitation.5. Tribunal's decision on the imposition of penalty and limitation period.6. Requirement to reverse Cenvat Credit for common services utilized.Analysis:1. The appellant was involved in manufacturing excisable goods and trading activities, availing Cenvat Credit on common services used in both operations. The Revenue demanded the reversal of a specific amount related to the traded goods, invoking Rule 6(3) of the Cenvat Credit Rules.2. Proceedings were initiated against the appellant through a show cause notice for a demand of Rs. 43,44,778 for the period from 2010-11 to 2014-15. The Original Adjudicating Authority confirmed the demand, interest, and penalty. The Commissioner (Appeals) upheld the demand and interest but set aside the penalty, noting that trading activities pre-01.04.2011 were not exempted services.3. The appellant challenged the impugned order on the point of limitation, arguing that confusion existed due to previous Tribunal decisions regarding trading activities not being considered services. The appellant contended that the disputed issue was a bona fide interpretation matter and offered to reverse any credit related to exempted services within the limitation period.4. The Tribunal considered the imposition of penalty and the limitation period. Since the penalty was set aside, indicating the appellant's bona fide intentions, the demand beyond the normal limitation period was deemed unjustified. Citing relevant case laws, the Tribunal held that the demand beyond the limitation period should be set aside.5. While part of the demand fell within the limitation period, the appellant agreed to reverse the proportionate Cenvat Credit for common services. The Tribunal emphasized that reversing the credit satisfies Rule 6(1) conditions, making the demand under Rule 6(3) unnecessary. The matter of quantifying the credit to be reversed was remanded to the Original Adjudicating Authority, leading to the disposal of the appeal in the mentioned manner.