Central Excise Notification 2/2016-CE (NT) dated 3rd Feb-2016

[Asked by Guest]

Dear Expert,

Please guide us on above subject

We have take service tax credit of manufacturing commission under category f Bushiness auxiliary service and not utilized but in respect of Notification No. 6/2015-CE (NT) Para No.7 (2) for purposes of sub-rule (1), then we have revert above disputed service tax credit "under protest" and on monthly basis we have take credit, do not utilized, revert under protest & intimate to the department.there for we have received us two SCN 1st SCN pending at tribunal & 2nd pending at SCN issuing authority, also range superintendent get details for issue periodical SCN, till date department have not issue SCN. My question as above.

1. Now department issue Notification 2/2016-CE (NT) then department able to issue periodical SCN to us for the same.

2. What status of previous SCN pending at various authority.

3. Service tax credit on Trading sales eligible ?

[KASTURI SETHI]

Sh.Yogesh Panchal Ji,

Notification No.2/2016-CE(NT) dated 3.2.2016 is applicable prospectivelyand not retrospectively.

 

[Rajagopalan Ranganathan]

Sir,

Date of issue of Notification No. 2/2016-CE (NT) dated 03.02.2016. The notification states that the amendments proposed in the notification will come into effect from the date of publication of the notification in the Official Gazette. This Notification is prospective in effect. Therefore the explanation inserted in rule 2 (l) of Cenvat Credit Rules, 2004 will come into effect only from 03.02.2016. Therefore the Department is not precluded from issuing the show cause notices for the period prior to 03.02.2016. Therefore they are valid.

Para 7 (2) of Notification No. 06/2015-CE (NT) dated 01.03.2015 stipulates how the Department will treat the utilization of credit by the assessee. This amendment was made to obviate various decisions of CESTAT/High Courts that if the balance available in the cenvat account of the assessee is sufficient to cove the wrong credit taken , the the credit wrongly taken shall be deemed to be not utilized and hence no interest is leviable when the wrong credit taken is reversed by the assessee.

[Mahir S]

Yes sir, we do endorse the above views.

[KASTURI SETHI]

Comprehensive and foolproof interpretation by Sh.Rajagopalan Ranganathan, Sir. Really appreciable.

AI Summary

Prospective effect of notification permits issuance of show cause notices for periods before its effective date.
The notification operates prospectively from its publication and therefore does not bar the department from issuing show cause notices for periods prior to its effective date. The amendment clarifies treatment of credit utilisation so that reversal of wrongly taken credit, when sufficient balance exists, may be treated as non-utilisation to mitigate interest liability. The question on service tax credit eligibility for trading sales remains unanswered in the responses.