Payment of Excise Duty on Clearances for which demand was raised: CESTAT deletes demand under Rule 6(3)(i) of CCR [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), deleted demand under Rule 6(3)(i) of Cenvat Credit Rules(CCR), 2004.

During audit of records of appellant, Posco Poggenamp Electrical Steel Pvt Limited, it was observed that the appellant is engaged in manufacturing of excisable goods i.e. Parts of Transformer” and “CRGO Core Lamination” and also engaged in the trading of goods which is a declared service in terms of Section 66E(a) of the Finance Act, 1994.

Further, trading of goods is one of the services is listed in the Negative list of service under Section 66(D)(e) of the Finance Act, 1994 and therefore, service tax is not eligible on trading of goods in terms of Section 66 B of the Act. It was also observed that appellant have availed the Cenvat credit of service tax paid on the services which were used in the manufacturing of dutiable goods as well as trading activity.

Since the trading is an exempted service and Cenvat credit of all these services were availed by the appellant and the same was utilized for discharging the central excise duty liability of the manufactured goods is the violation of Rule 6 of the Cenvat Credit Rules, 2004. Accordingly, the appellant was held liable to pay 6% / 7% of the value of exempted goods in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004.

The Counsel for the appellant submitted that in respect of all the trading goods, either excise duty was paid or Cenvat credit was paid in respect of removal of inputs as such, and all the packing materials of inputs was also cleared on payment of duty. Therefore, there is no application of Rule 6(3).

The Tribunal of Ramesh Nair, Judicial Member observed that “The appellant have paid the excise duty/ Cenvat on the clearances on which the demand was raised in the present case. With these details, there was no difficulty to the Adjudicating Authority as well as the appellate authority to arrive at the conclusion that there is no case of demand under Rule 6(3)(i) of Cenvat Credit Rules, 2004.”

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