The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that excise duty demand on traded goods is not sustainable.
The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed 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.
Background
The issue raised in the appeal whether the appellant/assessee 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 service was used in the trading of goods as well as manufactured goods cleared on payment of duty.
The appellant submitted 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. The 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. Therefore, the demand equal to 6% on the traded goods (exempted service) is not sustainable.
Conclusion
The tribunal while allowing the appeal held that the demand is not sustainable. Hence the order is set aside.
Case title: Solvay Specialities India Pvt Ltd v/s C.C.E. & S.T.-Vadodara
Citation: EXCISE APPEAL NO. 11000 OF 2018 – DB
Counsel for the Appellant: Shri Hardik Modh
Counsel for the Respondent: Shri P. Ganesan, Superintendent (AR)
Date of Decision : 13/09/2024
