The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently remanded a case concerning the reversal of proportionate Cenvat credit related to trading activities for reconsideration by the adjudicating authority.
The decision was rendered by the Tribunal while adjudicating a pair of cross appeals filed by M/s Supreme & Company Private Limited and the Commissioner of Central Excise, Kolkata II and vice versa.
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M/s Supreme & Company Private Limited, a manufacturing and trading entity based in Howrah had been booked by the Revenue for alleged non-compliance with Rule 6(3) of the Cenvat Credit Rules, 2004.
The primary contention raised by the Department was that the assessee failed to maintain separate accounts for input and input services used in the manufacture of dutiable goods and exempted goods, including those involved in trading, thereby attracting penal liability to pay an amount equivalent to 5% or 6% of the value of the exempted goods.
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In such regard, show-cause notice was issued, adjudicated and a part of the demand was confirmed by the adjudicating authority while another part of the demand was dropped by the Revenue – against which the Revenue has instituted the present appeal.
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While no appearance was made on behalf of Supreme & Company, P. Das and D. Sue appeared as the Authorized Representative for the Revenue in the cross appeals.
The Bench of Ashok Jindal (Judicial Member) and Rajeev Tandon (Technical Member) observed that the claim of the assessee is that they had reversed the proportionate cenvat credit attributable to the trading activities and thereby are not liable to pay any amount equal to 5% or 6% of the value of the exempted goods; the claim is one that is to be determined by the adjudicating authority.
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Consequently, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority to determine whether the assessee has reversed the proportionate cenvat credit attributable to their exempted goods, and verify is any amount is payable in such regard within a period of 60 days.
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