General practice amongst masses to not consider trading as an ‘exempted service’ till amendment was made in CCR – assessee had no malafide intention to avail undue benefit: CESTAT

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Rule 6 of CCR, 2004 – Trading – General practice amongst the masses to not consider trading as an ‘exempted service’ till amendment was made in the CCR – it cannot be said that assessee had malafide intention to avail undue benefit – Prior to 01.04.2011, there was confusion whether the trading activity can be treated as exempted service to invoke the provision of rule 6 of Cenvat Credit Rules on the said trading activity – when the legislators felt that the cenvat credit in respect of input service attributable to trading activity cannot be allowed, keeping in mind to bring the trading activity under the purview of rule 6, the definition of exempted service was amended – This development clearly shows that there was a serious interpretation in respect of rule 6(3) of CCR, 2004 and to remove the doubts, amendments, effective 01.04.2011, were incorporated – this issue was involved in various cases, therefore, it cannot be said that appellant alone was involved in availing credit on common input service and had malafide intention of not reversing credit – Appellant have been declaring the availment of cenvat credit on common input service in their ST-3 return and have recorded in their books of account the manufacturing activity as well as trading activity – in absence of any malafide intention and suppression of fact, extended period of demand cannot be invoked – demand is set aside on the ground of limitation itself – Appeal allowed: CESTAT

Citation: 2018-TIOL-1267-CESTAT-MUM

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