Tribunal Annuls Order: Time-Barred Demand Set Aside, No Suppression of Facts, Appellant's Appeal Allowed.

The Tribunal ruled in favor of the appellant, setting aside the demand under Rule 6(3) as time-barred due to the prospective nature of the exemption notification concerning trading activities. It found no suppression of facts, emphasizing the appellant's bonafide belief and regular audits. The impugned order was annulled, allowing the appeal.

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Issues:
1. Liability to pay under Rule 6(3) for not maintaining separate accounts for exempted services.
2. Whether the demand for the extended period is time-barred due to the exemption notification.

Analysis:
1. The appellant argued that the demand under Rule 6(3) was based on common input services attributed to both dutiable goods and trading activities. They contended that prior to 01.04.2011, the trading activity was not exempted, so the provision of reversal of Cenvat Credit under Rule 6(3) should not apply for the period in question. The appellant also claimed that the demand was time-barred since the concept of exempted service for trading activities only came into effect from 01.04.2011, while the period under consideration was from 01.04.2007 to 31.03.2011, with the show cause notice issued on 14.02.2014. They argued that no objection was raised during previous audits, indicating no suppression of facts. The appellant cited relevant judgments to support their arguments.

2. The Deputy Commissioner representing the revenue reiterated the findings of the impugned order, which raised the demand under Rule 6(3) based on common input services linked to trading activities declared as exempted under a specific notification. However, the Tribunal found that the trading activity only became exempted from 01.04.2011 and rejected the revenue's claim of retrospective effect. The Tribunal emphasized that a mere deeming fiction declaring trading activity as exempted could not have retrospective effect. They noted that prior to the notification amendment, there was ambiguity even within the department regarding the trading activity's status. The Tribunal observed that there was no suppression of facts by the appellant, and the effect of trading activity being exempted was held to be prospective in various judgments cited. The Tribunal concluded that the demand was time-barred and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand under Rule 6(3) on the grounds of being time-barred and lack of suppression of facts. The judgment highlighted the prospective nature of the exemption notification regarding trading activities and emphasized the importance of bonafide belief and regular audits in determining liability.

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