Appellant challenged a demand under Rule 6(3) of Cenvat Credit Rules regarding exempted trading activities. Tribunal held exemption was prospective, rendering demand time-barred due to lack of regulatory clarity prior to effectiveness date.
Impugned order set aside and appeal allowed on ground of time bar.
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Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
Excise Appeal No. 12190 of 2014 - DB
(Arising out of OIO-VAD-EXCUS-002-COM-083-13-14 dated 28/02/2014 passed by Commissioner of Central Excise, Customs and Service Tax-VADODARA-II)
Sew Eurodrive India Pvt Ltd
……..Appellant
Plot No. 04, Gidc, Estate, Por, Ramangamdi, VADODARA, GUJARAT
VERSUS
Commissioner of C.E. & S.T.-Vadodara-ii ……Respondent
1ST FLOOR... ROOM NO.101, NEW CENTRAL EXCISE BUILDING, VADODARA,GUJARAT-390023
APPEARANCE:
Shri Dhaval Shah, Advocate, Appeared for the Appellant Shri Tara Prakash, Deputy Commissioner (AR) Appeared for the Respondent
CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR
Final Order No.12370/2024
DATE OF HEARING: 09.08.2024 DATE OF DECISION: 15.10.2024
RAMESH NAIR
The issue involved in the present case is that (1) Whether the appellant is liable to pay an amount under Rule 6 (3) for not maintaining separate accounts for the exempted services i.e. trading activity for the period 01.04.2007 to 31.03.2011, when the trading activities covered under exempted service by Notification No.13/2011-CE (NT) dated 31.03.2011. (2) Whether the demand for the extended period is time barred when the issue that the trading activity became exempted is due to Notification issued on 31.03.2011.
E/12190/2014-DB
2
further submits that the demand is clearly time barred as concept of exempted service in respect of trading activity was brought only w.e.f. 01.04.2011,whereas the period involved in the present case is 01.04.2007 to 31.03.2011 and the show cause notice was issued on 14.02.2014. Hence, the entire period is time barred. He further submits that the periodical audits have been conducted that is for the period September, 2006 to June, 2007 in the year 2007-2008, for the period July, 2007 to September, 2008 during 2008-2009 and for the period August, 2008 to July, 2009 during 2009-2010 and no objection on the issue involved in the present case was raised. The first time the audit raised some doubt about trading activity in the year, 2012, therefore, there is no suppression of facts on the part of the appellant, hence, the demand is time barred. He placed reliance on the following judgments:-
E/12190/2014-DB
3
activity as exempted service under a deeming fiction, the same cannot have retrospective effect. Prior to the amendment of Notification No. 13/2011-CE (NT) whereby, the trading activity was made deemed exempted service, there was no clarity even with the department and therefore, the amendment was brought. Further, the appellant’s records have been audited regularly during the relevant period and department after knowing that the appellant are involved in trading activity and availing the Cenvat credit on various input services, some of which are common input service did not raise any objection. Therefore, in our considered view, firstly, there was a bonafide belief that trading activity will not attract any demand under Rule 6 (3), secondly,in fact, there is absolutely no suppression of fact on the part of the appellant. Therefore, we also observed that as per various judgments cited by the appellant, it has been held that the effect of trading activity being exempted service is prospective and not retrospective. Therefore on the issue, there were multiple litigations, this also shows that there is no malafide intention on the part of the appellant to invoke extended period of demand.
Pronounced in the open court on 15.10.2024)
(RAMESH NAIR) MEMBER (JUDICIAL)
(C L MAHAR) MEMBER (TECHNICAL)
Bharvi
2 issues framed by the court
Whether the appellant is liable to pay an amount under Rule 6(3) for not maintaining separate accounts for exempted trading activities prior to 01.04.2011.
Whether the demand for the extended period is time bar as the exemption from trading activity became effective only on 31.03.2011.
Colour shows how this judgement treated each authority
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2 provisions across 2 enactments
Sew Eurodrive India Pvt Ltd
Commissioner of C.E. & S.T.-Vadodara-ii
RAMESH NAIR
C L MAHAR
As recorded by the court registry
An appeal in a central excise matter before CESTAT.
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