TaxTMI 
TaxTMI 
2026 (9) TMI 1837
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....anufacture excisable goods viz., Sulphuric Acid, Ammonium Lauryl Ethanol Sulphate, falling under Chapters 28 and 34 of the First Schedule to the Central Excise Tariff Act, 1985. For the purpose payment of Central Excise duty on final products manufactured at their factory at Roha, Raigad and for compliance with Central Excise Statute, the appellant is duly registered with the jurisdictional Central Excise authorities holding registration No. AAACA3841LXM002. Besides aforesaid factory, the appellant has also taken separate registrations with jurisdictional authorities for registration of their Mumbai Head office for distribution of common input services as Input Service Distributor (ISD)/ service recipient under RCM basis, and for their warehouse situated at Bhiwandi as First Stage Dealer. The appellants avail CENVAT credit of central excise duty paid on inputs, capital goods and of service tax paid on input services for utilizing the same towards payment of central excise duty on final products. 2.3 During EA-2000 audit conducted by the department during 03.03.2014, 01 & 02.04.2014, 13.05.2014 and 12.06.2014 on the records of the appellant factory, it was inter alia identified t....
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.... 2002 and for appropriation of the amounts paid by the appellant. In adjudication of the aforesaid SCNs, learned Commissioner had confirmed the CENVAT demands of Rs. 3,86,78,711/- under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 along with interest; and imposed penalty equivalent to duty for an amount of Rs. 2,90,21,819/- for the extended period of limitation; Rs.4,07,508/- and Rs.5,58,181/- for subsequent periods, under Rule 15 read with Section 11AC ibid; besides this, he also imposed penalty of Rs.5000/- under Rule 27 of the Central Excise Rules, 2002 on the appellant. Feeling aggrieved with the impugned order, the appellant has preferred this appeal before the Tribunal. 3.1 Learned Counsel appearing for the appellant submitted that the appellant had properly determined the CENVAT credit amount to be paid by calculating the value of trading of goods as per explanation clause (c) to Rule 6 ibid, and in terms of formula prescribed under Rule 6(3)(ii) read with Rule 6(3A)(b)(ii) of the Rules of 2004. He further provided detailed calculation of value in case of trading of goods, giving break-up value for sale of manufactured goo....
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....ecords of the case. We have also examined the submissions advanced by learned Counsel appearing for the appellant and the learned Authorized Representative of the Department along with the written submissions made in the form of paper books and compendium of relied upon case laws. 6. The issue involved in this appeal is to examine whether the appellant is required to pay the CENVAT demand in respect of trading of goods in their factory; and whether confirmation of adjudged demands in the impugned order is legally sustainable. 7. Both sides agree that the issue arising out of the present dispute lies in the narrow compass of determining the appropriate amount of CENVAT credit that is required to be reversed in respect of common input services used in the trading activity vis-à-vis manufacture of final products on which excise duty is payable, as provided under Rule 6(3) ibid. 8. In the impugned order, learned Commissioner has given his findings for confirmation of the CENVAT demands along with interest as follows: "23. It is pertinent to note that the assessee have wrongly arrived at the 'Trading as % to Total Income 'as appearing 'K' in the ....
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....as: i) the 'value' arrived by them in their calculation as reflected in the above table does not account for cost of the traded goods or their trading margin. ii) the formula for reversing the credit on input services is not as per the formula under Rule 3A since the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G-denotes total CENVAT credit taken on input services during the month; I find that this represents payment of duty on provisional basis since the ratio involve the figures pertaining to the previous year. iii) as per the next condition, after the finalisation of balance sheet for the period under consideration the assessee is required to pay an amount equal to the difference between the a....
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.... find that in the said decision it was also held that the term business used in the definition of input services is relating to the business of manufacture and not relating to trading activity. Therefore, the denial of credit on input services used in trading activities is correct in law and the impugned-demand is sustainable. On perusal of the methodology for quantification of the demand for the period 2009-10 and 2010-11 I find that the duty is quantified by taking the ratio of the trading turnover to the total turnover against the total input service credit availed. In subsequent period, i.e. 2011-12 onwards the duty is quantified as per the amended provisions. I also find that the assessee did not disclose the fact of availing input service tax credit attributable to trading, the same amount to suppression or willful misstatement of facts and therefore invocation of extended period of time is justified. My opinion is supported by the decision of the Hon'ble Tribunal reported as 2015 (38) STR 431 (Tri Mumbai) in the case M/s. Godrej & Boyce Mfg. Co. Ltd. vs. Commissioner of Central Excise." 9. On perusal of the case records, detailed statements as provided at paragraph 22 of ....
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....ate Bench of the Tribunal at Ahmedabad in the case of self-same appellant involving identical set of facts have held vide Final Order No. 12020-12021/2024 dated 13.09.2024 in Excise Appeal Nos. 11000, 11001 of 2018, that the CENVAT demand is not sustainable. The extract of the relevant paragraphs are as follows: "4. We have carefully considered the submission made by both the sides and perused the record. We find that the demand of CENVAT Credit was raised which is equal to 6% of difference between the purchase price and sale price of trading goods in terms of Rule 6 (3). However, it is also not in dispute that the appellant have reversed the proportionate credit along with payment of interest. Therefore, after such reversal and payment of interest for the delayed period i.e. from the date of taking credit till the date of reversal of proportionate credit the demand equal to 6% under Rule 6 (3) shall not sustain as held in numerous Judgments, some of the Judgments are cited above by the appellant. 5. Therefore, the demand is not sustainable. Hence the impugned order is set aside. Appeal is allowed." 10.2 We further find that Co-ordinate Bench of the Tribunal in....