Appellant wins appeal, avoids payment demand due to cenvat credit reversal. Tribunal cites case law.

The appellant successfully argued that due to the reversal of cenvat credit for trading activity and payment of interest, the demand for 6/7% of the traded goods' value was not applicable. Citing relevant case law, including CHANDRAPUR MAGNET WIRES, the Tribunal held that the appellant's exercise of the Rule 6(3) option rendered the revenue's demand invalid. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, absolving the appellant from the 6/7% payment.

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Issues:
Whether the appellant is liable to pay 6/7% of the value of traded goods as exempted goods when cenvat credit was availed on common input service attributed to both dutiable goods and exempted service, specifically trading activity.

Analysis:
The appellant, in this case, had initially availed cenvat credit on common input service used for dutiable goods and exempted trading activity. The department demanded 6/7% due to the appellant not opting for any option at any stage. However, the appellant reversed the cenvat credit for the trading activity and paid interest, invoking Rule 6(3) options. The appellant argued that due to the reversal and interest payment, the 6/7% demand was not applicable, citing various judgments like TIARA ADVERTISING VS. UNION OF INDIA and others.

The Assistant Commissioner for revenue reiterated the impugned order findings, leading to a detailed consideration by the Member (Judicial). The appellant's reversal of cenvat credit for the trading activity, as per the proportionate credit calculation and interest payment, aligned with the Supreme Court's ruling in CHANDRAPUR MAGNET WIRES case. The Tribunal emphasized that the choice of options under Rule 6(3) is the assessee's prerogative, regardless of when the option is exercised. Therefore, the revenue cannot enforce a specific option, like the 6/7% payment, if the appellant had already reversed the credit and paid interest, as supported by various cited judgments.

Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, signifying that no demand for 6/7% of the trading activity's value would be sustained. The judgment was pronounced in open court on 01.03.2023.

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