TMI Blog2019 (8) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount as per the requirement of sub-rule (3) of Rule 6 ibid was not diligently complied with by the appellant, as asserted. However, it is noticed that based on the records maintained by the appellant, the Cenvat amount attributable to the common input services used for the trading activity was reversed. On proper scrutiny of the case records, we are convinced that the extended period of limitation cannot be invoked against the appellant for confirmation of the adjudged demands inasmuch as the charges of suppression, fraud, wilful misstatement etc., cannot be invoked for bona fide interpretation of the statutory provisions placed by the appellant. This Tribunal in the case of CST, NEW DELHI VERSUS M/S. AVL INDIA PVT. LTD. [ 2017 (3) TMI 793 - CESTAT NEW DELHI] has held that the extended period of limitation cannot be invoked to the issues concerning interpretation of the provisions contained in the explanation to Rule 2(e) ibid and accordingly, has held that the demand, if any, should only be confined to the normal period. It has also been held that penalty cannot be imposed on the assessee. Time Limitation - HELD THAT:- There are no merits in the impugned order, inso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed service (trading activity) in terms of sub-rule (3) of Rule 6 ibid. Accordingly, show cause proceedings were initiated against the appellant, seeking for recovery of the amount contemplated under the statute. The show cause notice dated 19-10-2012 has invoked the proviso clause appended to sub-section (1) of [Section] 73 of the Finance Act, 1994 for effecting recovery of such amount. The matter was adjudicated against the appellant, in confirming the proposals made in the show cause notice. Feeling aggrieved with the impugned order, the appellant has filed this appeal before the Tribunal. 3. The Learned Advocate appearing for the appellant submits that for the period April, 2007 to March, 2011, on the basis of the accounting records, the appellant had reversed the proportionate Cenvat credit in respect of the common input services used for providing the exempted service. He also contended that for delayed reversal of such Cenvat credit, the appellant had paid the interest at the applicable rate. The Learned Advocate further submits that the proceedings initiated by the Department is barred by limitation of time inasmuch as the period in dispute is from April, 2007 to March, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pended to the said rule w.e.f. 1-4-2011. The issue whether, the activity of trading should fall within the ambit of exempted service was highly contentious and there were divergent views by the judicial forums. Even, the issue regarding retrospective or prospective application of such explanation clause was also highly debatable. Thus, under such circumstances, payment of amount as per the requirement of sub-rule (3) of Rule 6 ibid was not diligently complied with by the appellant, as asserted. However, it is noticed that based on the records maintained by the appellant, the Cenvat amount attributable to the common input services used for the trading activity was reversed. On proper scrutiny of the case records, we are convinced that the extended period of limitation cannot be invoked against the appellant for confirmation of the adjudged demands inasmuch as the charges of suppression, fraud, wilful misstatement etc., cannot be invoked for bona fide interpretation of the statutory provisions placed by the appellant. We find that in an identical situation, this Tribunal in the case of AVL India Pvt. Ltd. (supra) has held that the extended period of limitation cannot be invoked to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um.). The said decision was affirmed by the Hon ble Bombay High Court reported in 2016 (41) S.T.R. 577 (Bom.) and SKF India Ltd. (ISD) - 2016 (44) S.T.R. 61 (Bom.). 9. As such, we hold that the findings of the Original Authority that the demand for reversal is made in the vacuum without support of provisions of law, is legally unsustainable. As noted above, input service credit is available only when output service is taxable. If there is no output service, no credit can be taken. Since trading, during the material time, is not even considered as an exempted service , it necessarily follows that no credit on input services used for trading activities can be availed at all. If there are common input services, it necessarily follows that, in the absence of separate accounts, the services attributable to taxable output service can only be held eligible to the respondent. In view of this legal position, we find that the respondent is liable to reverse the credit attributable to the trading activities. Considering the issue is of legal interpretation and there are different decisions on the matter, we find that the demand is to be restricted to normal period and no penalty is imposa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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