2024-VIL-428-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Rule 6(3A) of CENVAT credit Rules, 2004 – Clearance of electricity – Availment of Cenvat credit – Computation of demand – Appellant is engaged in business of manufacture of iron & steel products and generation of power – Appellant avails cenvat credit of excise duty paid on inputs & capital goods and service tax paid on input services – On scrutiny of balance sheet, revenue noticed that Appellant has sold electricity to electricity board and has engaged in trading of goods like manganese ore, coal & imported scrap – Revenue issued demand notice in two parts, i.e. demand of credit pertaining to sale of electricity and demand of credit pertaining to trading of goods – Commissioner confirmed demands proposed in notice – Whether computation of demand of amount on account of CENVAT Credit availed on common input services used for exempted goods, namely, electricity cleared from factory of Appellant is correct – HELD – Appellant had opted for reversal of amount in lieu of CENVAT Credit under Rules 6(3A) of the Rules on account of use of common inputs for dutiable and exempted goods – In declaration, Appellant have mentioned electricity as exempted goods – Appellant’s declaration does not indicate common use of input services – Appellant had never submitted data of electricity duly certified by Chartered Accountant – Computation of demand of amount on account of CENVAT Credit availed on common input services used for electricity is upheld, while issue is being remanded to original authority to verify figures – Appeal partly allowed - Trading of goods – Reversal of credit – Whether demand of amount on account of CENVAT Credit availed on common input services used for exempted services alleged to be trading of goods, but claimed to have cleared inputs as such is correct – HELD – If clearances are considered as trading being an exempted service, Appellant was required to pay amount of CENVAT credit as per their option under Rule 6(3A) of the Rules – If clearance of goods held to be clearance of “inputs as such”, then there may not be any demand, as Appellant has cleared goods as inputs on reversal of CENVAT credit taken on these inputs – Clearances are beyond expression of “inputs cleared as such” and thus amounts to “trading of goods” – Trading, being an exempted service, was done by use of common input services attracting provisions of Rule 6 of the Rules – Appellant has not maintained separate accounts of common input or input services – In view of fact that Appellant has reversed Cenvat Credit on goods which they had traded, amount so reversed is liable to be appropriated against demand – Matter remanded to original authority to recalculate differential demand taking due note of CENVAT credit which is already reversed - Invoking of extended period of limitation – Sustainability – Whether Revenue is justified in invoking extended period of limitation – HELD – Declaration under Rule 6(3A) of the Rules filed by Appellant was found to have not mentioned common input services which was used for both exempted goods and services – Non-disclosure of clearances of electricity and trading of goods in their monthly return cannot fetch ignorance, as Appellant was bound to disclose such information in their monthly statutory returns – Appellant is a public limited company was well aware of statutory requirements – Upon a deeper examination of declaration under Rule 6(3A) of the Rules, suppression is apparent – Appellant succeeded in suppressing critical information from scrutiny, hence, extended period is rightly invokable in this case – Invocation of extended period is upheld.
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