Demand of 6% of CENVAT Credit not sustainable when Credit already paid with interest: CESTAT [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) Bench of Ahmedabad held that demand of CENVAT Credit raised which is equal to 6% of difference between the purchase price and sale price of trading goods in terms of Rule 6 (3) is not sustainable when the proportionate credit is already paid with interest.

The issue involved in the present case is that whether the appellant, Solvay Specialities India Pvt Ltd is liable to pay an amount equal to 6% upon the difference between the sale price and the purchase price of the goods traded when the credit on common input service was availed by appellant such common input service was availed by appellant such common service was used in the trading of goods as well as manufactured goods cleared on payment of duty.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

Shri Hardik Modh Counsel appearing on behalf of the appellant submits that the appellant have admittedly paid the proportionate CENVAT Credit attributed to the trading goods along with interest from the date of availment of credit till the reversal thereof.

He submits that such proportionate credit was reversed in terms of Rule 6 (3) (2) for the period of 2014-2015 and intimated to the Central Excise Department about such reversal of credit vide letter dated 09.11.2016.

Therefore, the demand equal to 6% on the traded goods (exempted service) is not sustainable in accordance with various judgements.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

Shri. P. Ganesan, Superintendent (AR) appearing on behalf  of the revenue reiterates the findings of the impugned order.

The CESTAT Bench comprising Ramesh Nair ( Judicial Member ) and Raju ( Technical Member ) by carefully considering both the sides and persuading the record found 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,cited above by the appellant. 

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

Therefore, the demand is not sustainable. Hence the impugned order is set aside. Appeal is allowed. 

C.C.E. & S.T.-Vadodara-ii, the respondent was represented by Shri P. Ganesan, Superintendent (AR).

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates