Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. Up Telelinks on 11 May, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. II
Excise Appeal No. 52845 of 2014- (SM)
Excise Appeal No. 53159 of 2014- (SM)
[Arising out of Order-In-Appeal No. GZB-EXCUS-000-APP-239-13-14 dated 27/02/2014 passed by Commissioner of Central Excise (Appeals) Ghaziabad ]
For approval and signature:
Honble Mr Ashok Jindal, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Commissioner of Central Excise Appellants
Ghaziabad
Vs.
M/s. UP Telelinks. Respondent
AND M/s. UP Telelinks Appellants Vs. Commissioner of Central Excise Respondent Ghaziabad Appearance:
Shri Rajesh Chibber, Advocate for the Appellants Shri G R Singh, AR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Date of Hearing /decision: 11.05.2015 FINAL ORDER NO. A/ 51689-51690/2015-(SM) Per Ashok Jindal :
Both the assessee as well as revenue are in appeals against the same impugned order.
The facts of the case are that assessee was a manufacturer of electric items. During the course of audit, it was found that during the period 2007-2008, 2010-2011, it was revealed that appellant is engaged in the activity of trading also. The assessee was required to reverse the Cenvat credit availed on these inputs/ goods involved in the trading activity and reversed Cenvat credit availed on these goods. Revenue is of the view that as trading activity is an exempted service as per the provisions of Rule 2(e) of Cenvat Credit Rules, 2004 as amended w.e.f. 1.4.2011. Therefore assessee was required to reverse proportionate Cenvat credit attributable to trading activity. On this basis, proceeding has been initiated against the assessee for denial and proportionate demand of 6% /8% of the value of trading activity conducted by the assessee during the impugned period along with interest and equivalent amount of penalty was also proposed to be imposed
3. The adjudicating authority confirmed the proposal made in the show cause notice. On appeal, learned Commissioner (Appeals) held that the assessee is required to reverse the proportionate credit attributable to trading activity as per the Rules as amended w.e.f. 1.4.2011. Against such order, both the parties are in appeal, Revenue is in appeal on the ground that formula adopted by learned Commissioner (Appeals) is not correct and assessee is in appeal on the ground that as trading activity is already declared as exempted input from 1.4.2011 and prior to that there were not required to reverse the proportionate credit.
4. Heard the parties. Considered the submissions.
5. Learned Counsel for the assessee submits that it is not the case of trading activity but it is a case of removal of inputs as such they have reversed the Cenvat credit as per Rule 3(5) of Cenvat Credit rules, 2004, whatever the credit has been taken by the assessee on said inputs, they are not required to reverse the proportionate Cenvat credit on inputs service or required to pay amount equivalent to 6% / 8% of the trading activity. To support his contention he relied on the decision of CCE, Chandigarh I vs. Punjab steels [2010 (260) ELT 521 (P&H)]; A R Casting (P) Ltd. vs. CCE, Chandigarh [2010 (256) ELT 420 (Tri-Del)]; and Bansal Alloys & Metals Ltd. vs. CCE, Chandigarh [2010 (250) ELT 529 (Tri-Del)].
6. Learned AR opposed this contention of the learned Counsel and submits that as per Rule 2(e) of the Cenvat Credit Rules, 2004 by a notification issued on 1.4.2011 and since this amending notification expands the scope of the term exempted service so as to include trading activity which means that trading activity was exempted prior to that date also on which no duty is payable by assessee. Therefore assessee is required to pay 6% /8% of the value of the trading conducted by them during the impugned period. In these circumstances, the order of Learned Commissioner (Appeals) lacks any merits and same is to be set aside.
7. I have gone through the records. Considering the submissions advanced by both sides. In the impugned order, none of the lower authorities have considered the defence taken by the assessee that they have cleared inputs as such and no verification has been done to that effect whether the assessee has cleared inputs as such or was involved in the activity of trading. Show cause notice has been issued only on the basis of figures shown in the balance sheet. For removal of inputs as such, Rule 3(5) clearly states that if inputs is removed as such, the assessee is required to reverse only Cenvat credit availed on such inputs. In judicial terms which has been contended by the assessee as mentioned hereinabove, if inputs is removed as such, in that case the assessee is required to reverse the credit availed on the inputs and not required to reverse proportionate credit on inputs service pertaining to such goods and required 6% /8% of the value of such goods. As revenue has failed to produce any evidence to show that appellant was involved in the trading activity, it may cleared inputs as such. In these set of facts, Cenvat credit taken by the assessee on the input which are cleared as such, is attributable to proportionate reversal is not supported by cogent reasons. Therefore, as per the provisions of Rule 3(5) of Cenvat Credit Rules, 2004 the assessee was to reverse the Cenvat credit availed on inputs cleared as such. Therefore, I hold that assessee is not required to pay any amount equivalent to 6% /8% of the value of inputs cleared as such or reversal of proportional credit attributable to input cleared. With these terms, assessees appeal is allowed and Revenues appeal is dismissed.
(Dictated and pronounced in the open court ) ( Ashok Jindal ) Member(Judicial) ss 2