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TMI Blog2024 (12) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, the appellants were also engaged in the trading activity. The Audit Wing had interpreted that since the appellants are engaged in the activity of trading, the same should be considered as 'exempted service' in terms of Rule 2(e) of the CENVAT Credit Rules, 2004 and they should not be eligible to take CENVAT Credit on inputs and inputs services used for the activity of trading. Based on the audit objection raised by the Department, show-cause proceedings were initiated against the appellants, which culminated into the adjudication order dated 31.12.2013 passed by the learned Commissioner of Central Excise, Pune, wherein central excise duty demand of Rs.2,34,11,652/- was confirmed alongwith interest and equal amount of penalty was imposed on the appellants. Feeling aggrieved with the impugned order dated 31.12.2013, the appellants have preferred this appeal before the Tribunal. 2. Learned Advocate appearing for the appellants submitted that on the basis of audit report submitted by the Department, the appellants had already reversed the CENVAT Credit amounting to Rs.56,69,316/-, which has been appropriated in the impugned order dated 31.12.2013. Learned Advocate has pleaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-C.E. (N.T.) dated 01.03.2011 w.e.f. 01.04.2011. The effect of such amendment was that the explanation clause was appended to such definition, providing that "for the removal of doubt, it is hereby clarified that 'exempted service' includes trading." Since the explanation clause was added to the definition of 'exempted service' w.e.f. 01.04.2011, the assessee was not permitted to avail the CENVAT Credit on the inputs or input services used in the provision of trading activity. Wherever the common CENVAT Credit has been availed for manufacture of dutiable final products as well as for trading activity, the assessee was required under the statute to comply with the procedures laid down under Rule 6 of the Rules of 2004. It is an admitted fact on record that immediately on pointing out the mistake by the Audit Wing of the Department, regarding the irregular availment of CENVAT Credit on inputs and input services used for trading activity, the appellants had suo motu reversed the CENVAT Credit taken by them for the period 2011-12. The amount so reversed by the appellants as ineligible CENVAT Credit, consequent upon insertion of the explanation clause in the definition of exempted serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices 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 mis-statement 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 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. The relevant paragraphs in said decision are extracted herein below: 9. On the second issue, we find that the Cenvat Credit Scheme is available only in respect of an assessee, who is either manufacturing dutiable final products or providing taxable output service. Admittedly, during the relevant time, the trading is not categorized as service at all. It is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 imposable on the respondent." 7. Further, we also find that Hon'ble Madras High Court in the case of Shriram Value Services Pvt. Ltd. (supra) has also held that in the facts and circumstances of the case, extended period of limitation cannot be invoked for confirmation of the demands beyond the normal period provided under Section 11A of the Act 1944. The relevant paragraphs in the said judgment are quoted herein below: - "6. From the above, it is clear that the position was clarified by the Government by insertion of Explanation only with effect from 1-4-2011 that the trading activity will be Exempted Services. The Explan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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