2019 (2) TMI 7

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....y, the appellants had entered into High Sea Sale transactions of imported Base Oil which is sold before it enters Indian waters and the sale transactions are carried out with the buyer on High Sea Sale basis. 2.2 According to the Department, the said activity of High Sea Sale is a trading activity and is covered under the scope of exempted service under Rule 2(e) of the CENVAT Credit Rules (CCR), 2004. Since the appellant had not maintained separate accounts for the manufacture of dutiable products and trading activity (exempted services), they were intimated to follow Rule 6 of CCR, 2004. The appellant voluntarily calculated the amount as per Rule 6(3A)(c) of CCR, 2004 and reversed Credit of Rs. 6,21,222/- for the period 2011-12 and Rs. 5....

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....nt and to avoid litigation, the appellant opted to reverse the Credit. However, while calculating the amount attributable to trading (exempted service) that has to be reversed, as per Rule 6(3A)(c), they had erroneously taken the value of entire sales instead of adopting the difference between the cost value and the sale value of the goods sold. They had thus reversed Rs. 11,25,538/- instead of reversing only Rs. 2,86,785/-. 3.3 He submitted that the Original Authority has rejected the refund claim stating that the appellant has not exercised the option prescribed under Sub-rule (3) of Rule 6(3A) of CCR, 2004; that therefore appellant has to pay an amount at the rate of 6% of the value of the traded goods. Another reason for rejecting the ....

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.... they are not eligible to reverse the Credit attributable to trading. When no option has been exercised, the appellant ought to have paid an amount at the rate of 6% of the value of traded goods as provided in Rule 6(3)(i) of CCR, 2004. The appellant's reversal on pro rata basis cannot be accepted. 4.2 Further, a Show Cause Notice dated 24.02.2016 has been issued demanding the amount quantified under Rule 6(3)(i) of the CCR, 2004 for the said periods. Therefore, during the pendency of adjudication of such Show Cause Notice, the claim of the appellant that they are eligible for the refund cannot sustain. The authorities below have rightly rejected the refund. 5. Heard both sides. 6. The appellant is aggrieved by the rejection of refund cl....

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....les, 2004. 7. In any case, the appellants have emphasized that they have not availed CENVAT Credit on any common inputs or input services in relation to such High Sea Sales transactions. In spite of that, the audit has raised objection that their activity of High Sea Sales is a trading activity falling under the scope of exempted service as defined under Rule 2(e) of the CCR, 2004 and that therefore, they have to follow the procedures contained in Rule 6(3) of CCR, 2004. There is no evidence to show that common input services have been used for such High Sea Sales. Further, possibly to buy peace with the Department, the appellant had reversed the CENVAT Credit voluntarily and is now contesting only the rejection of refund claim. I therefor....