Tribunal rules in favor of appellant on cenvat credit reversal

The Tribunal ruled in favor of the appellant in a case involving the availing of cenvat credit on inputs and input services, as well as the reversal of cenvat credit. It was found that the appellant engaged in trading of coal as an exempted service and was required to reverse proportionate cenvat credit on inputs and input services used for trading activities. The appellant's reversal of cenvat credit was deemed sufficient, and the demand for separate accounts for exempted services was not upheld.

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Issues:
The case involves the appellant availing cenvat credit on inputs and input services, removal of inputs to sister units, trading of goods, and the requirement to reverse cenvat credit.

Details of Judgment:

Issue 1: Availing of cenvat credit on inputs and input services
- The appellant availed cenvat credit on inputs and input services used in manufacturing their final products.
- Inputs like coal, pig iron were used in or in relation to the manufacture of final products.
- The appellant removed some quantities of inputs to sister units and sold unwanted inputs.
- Allegation was made that the appellant engaged in 'Trading of Goods' under exempted service.
- Show cause notice was issued for non-maintenance of separate accounts for taxable and exempted trading services.

Issue 2: Reversal of cenvat credit
- The appellant contended that they reversed proportionate cenvat credit on input services and duty was paid on dutiable goods.
- Cited decisions of Punjab & Haryana High Court to support their contention.
- Department argued that the appellant was engaged in trading of coal, declared as an exempted service.
- The appellant was required to reverse cenvat credit on input services used for providing exempted service.

Judgment:
- The Tribunal found that the appellant was engaged in trading of coal as an exempted service.
- The appellant was required to reverse proportionate cenvat credit on inputs cleared as such and input services used for trading activities.
- The case laws cited by the appellant were deemed irrelevant as they did not apply to the circumstances of this case.
- The appellant's reversal of cenvat credit on inputs and input services for trading activities was considered sufficient.
- The demand for non-maintenance of separate accounts for exempted services was not upheld.
- The appeal was disposed of in favor of the appellant.

Conclusion:
The Tribunal held that the appellant was required to reverse cenvat credit on inputs and input services used for trading activities, and the demand for non-maintenance of separate accounts was not justified.

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