2026-VIL-733-CESTAT-BLR-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Cenvat credit on common input services used for both manufacturing and trading activities - The appellant was availing Cenvat credit on the input services like 'business support service' and 'security services' which were the common inputs services used for both manufacturing activities as well as trading activities - Whether the appellant is liable to pay an amount equal to a percentage of the value of the exempted service (trading activity) under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 for not maintaining separate accounts of utilizing such credits - HELD - The demand for the period 2009-2010 to 2010-2011 is unsustainable as the definition of "exempted services" under Rule 2(e) of the Cenvat Credit Rules, 2004 was amended to include "trading" only with effect from 01.04.2011. Prior to that, there was no provision in law to disallow Cenvat credit availed on input services utilized for trading activity - As regards the demand for 2011-12, since the appellant had already reversed the entire Cenvat credit availed on the common input services, it tantamounts to non-availment of credit and therefore the appellant would not be required to pay any further amount under Rule 6(3)(i) - Further, the demand confirmed for the period 2009-10 to 2012-13 by invoking the extended period of limitation is also unsustainable as the Department was aware of the fact of trading activity and availment of Cenvat credit on common input services, but failed to issue the show cause notice within one year - The impugned order is set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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