Appellate Tribunal Overturns 6% Payment Demand on Cenvat Credit Due to Limitation, No Malafide Intent Found.

The appellate tribunal ruled in favor of the appellant, a Cooperative Bank, determining that the demand for 6% payment under Rule 6(3) of the Cenvat Credit Rules, 2004, was not sustainable due to the limitation issue. The tribunal found no suppression of facts or malafide intent by the appellant, as they had regularly filed returns and corresponded with the department. The show cause notice was issued beyond the normal limitation period, rendering the demand unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed under Section 73(1) of the Finance Act, 1994.

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Issues involved: Whether the appellant is liable to pay 6% of the value of exempted services when availing Cenvat credit on common input service.

Summary:

Issue 1 - Limitation:
The appellant, a Cooperative Bank, contested the issue of limitation regarding the demand of 6% under Rule 6(3) of Cenvat Credit Rules, 2004. The appellant argued that they regularly filed ST-3 returns declaring the availment of Cenvat credit and corresponded with the department since April 2010, indicating no suppression of facts. The appellant's activity was known to the public, and it was held that there was no suppression of fact or malafide intent to evade payment of service tax. The show cause notice was issued beyond the normal period, making the entire period of demand beyond limitation. Consequently, the demand was found not sustainable solely on the ground of limitation, leading to the setting aside of the impugned order and allowing the appeal.

Conclusion:
The appellate tribunal ruled in favor of the appellant, determining that the demand was not sustainable due to the limitation issue, as per Section 73(1) of the Finance Act, 1994.

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