CESTAT quashes demand for reversal of CENVAT Credit against Honda Cars [Read Order]

CESTAT quashes demand for reversal of CENVAT Credit against Honda Cars [Read Order]

Honda Cars - CENVAT Credit - CESTAT - Taxscan

The Customs, Excises, and Service Taxes Appellate Tribunal (CESTAT) quashed the demand for reversal of CENVAT Credit against Honda Cars.

The appellants, Honda Cars are engaged in packing and labelling of automobile parts and safety headgear. The appellants are also engaged in trading of dyes which they get manufactured on job work and appellants are also engaged in supply of manpower services for manufacture of dyes in house. The appellants were therefore engaged in activities which were liable to tax and also in trading activities which were not liable to service tax.

Consequently, they became liable for reversal of CENVAT Credit in terms of Rule 6 of CENVAT Credit Rules, 2004. The appellants were not maintaining separate records of receipt, consumption of inventory of inputs and input services in terms of Rule 6(2) of CENVAT Credit Rules, 2004 and therefore, they opted to pay CENVAT Credit as determined under Rule 6(3A) of CENVAT Credit Rules, 2004 in terms of Rule 6(3)(ii) of CENVAT Credit Rules, 2004.

The appellants were from time to time reversing the credit as prescribed under Rule 6(3A) in terms of formula prescribed therein. The appellants were submitting the detailed calculation on said reversal to the Revenue from time to time on annual basis. The amount of reversal was calculated by them in terms of Rule 6(3A)(c)(iii).

The Revenue was of the opinion that the term ‘P’ should be the total service tax taken by the appellant and not merely the service tax credit of common input service taken by them. Therefore, the demand in show cause notice was issued and later confirmed by the Revenue requiring the appellant to pay CENVAT Credit.

The coram headed by the President, Justice Dilip Gupta while allowing the appeal held that the appellants have been from time to time submitting intimation under Rule 6(3A) of CENVAT Credit Rules, 2004 showing full calculation of the manner in which they have arrived at the reversal of CENVAT Credit. In these circumstances, it is apparent that there was no suppression or mis-declaration on the part of the appellant and, therefore, the extended period of limitation could not have been invoked.

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