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2018 (3) TMI 324 - AT - Central ExciseCENVAT credit - whether the Appellant is required to reverse the cenvat credit on the common input service attributed to the trading activity for the period prior to 1/4/2011 when the trading activity was considered as exempted service, as per rule 2(E) w.e.f. 1.4.2011? - time limitation. Held that: - the Appeal can be disposed of only on limitation since the SCN has invoked the extended period, i.e. beyond one year. As per the fact of the case, the Appellant are carrying out manufacturing activity in respect of dutiable goods and simultaneously, they are also doing trading activity in respect of bought out goods, Prior to 1.4.2011, there was a confusion whether the trading activity can be treated as exempted service to invoked the provision of Rule 6 of Cenvat Credit Rules on the said trading activity. The trading activity was not taxable service, therefore, there was an interpretation that trading being neither service or exempted service, does not cover under Rule-6 of the Cenvat Credit Rules 2004. It is a settled law that when there is an interpretation of law and had general practice amongst the mass, it cannot be said that the assessee has malafide intention to avail undue benefit. It is also on record that the Appellant have been declaring the availment of cenvat credit on common input service in their ST-3 return. The Appellant have recorded in their books of account the manufacturing activity as well as trading activity. In such situation, it cannot be alleged on the Appellant that they have suppressed the facts to evade duty. In absence of any malafide intention and suppression of fact, the extended period of demand cannot be invoked. Hence, the demand is liable to be set aside on the ground of limitation itself. Appeal allowed - decided in favor of appellant.
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