Recovery of CENVAT credit of Excise Duty availed on common input services attributable to exempted activity of trading: CESTAT Directs Re-adjudication [Read Order]

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directed re-adjudication for recovery of CENVAT credit of excise duty availed on the common input services attributable to exempted activity or trading. 

VVF (India) Ltd, the appellant assessee was a manufacturer of excisable goods such as refined glycerin and different grades of fatty acids. They are paying central excise duty on the goods manufactured. They have also availed facilities of CENVAT credit under CENVAT Credit Rules (CCR), 2004. 

The assessee appealed against the order passed by the adjudicating authority for confirming the demand of CENVAT credit availed on the input service credit of Rs.51,45,637/- and imposition of equal penalty. 

Rajesh Ostwal, the counsel for the assessee contended that the assessee had not availed credit of input services relating to trading activities and that Rule 6 of CENVAT Credit Rules provides three options to the assessee for taking credit on input service used for exempted goods or exempted services and under such circumstances. 

Also submitted that the Revenue had not pointed out in the subject show cause notice the quantum of credit availed by the assessee on common input services. 

Amrendra Kumar Jha, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was liable for the demand raised by the department. 

The Bench observed that the matter needs to be remanded to the original authority with the direction to recover that quantum of CENVAT credit which was part of the CENVAT credit availed on common input services and which was attributable to exempted activity of trading. 

The two-member bench comprising Anil G Shakkarwar (Judicial) and Suvenda Kumar Pati (Technical) directed re-adjudication and directed the assessee to cooperate with Revenue and provide all the data necessary for passing such an order. 

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