2014 (12) TMI 455

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... New Delhi canvasses orders from customers. > Most of the Orders bagged by BHEL are for supply of complete package for Power Plant. The contract involves supply of both BHEL manufactured goods and Bought out goods. > Total price and scope of the Contract bagged from Customer is allocated to the various units of BHEL Manufacturing units and Power Sector Regional Offices by Corporate Office. > Erection and commissioning of both BHEL manufactured goods and Bought out goods at the customers site are executed by BHEL, Power Sector Regional Offices. Service Tax thereon is paid by the Power Sector Regional Offices and not by the Appellant. > Major portion of the equipments are manufactured at the Appellants manufacturing unit at Hyderabad wh....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... > The appellants have violated Rule 6(3) of CCR 2004 which provides rules for utilizing credit when credit is availed on inputs/input services used for manufacturing/providing taxable and exempted goods/services. > Rule 6(3) as it stood up to 31.03.2008 entitled the Appellants to utilize credit only to the extent of 20% of the Service Tax payable by him on taxable output services. > Rule 6(3)(i) required the Appellants to pay an amount equal to 8% (up to 06.07.2009)/ 6% (up to 31.03.2011) and 5% (up to 31.03.2012) of the value of the exempted services or as per Rule 6(3)(ii) pay an amount equivalent to the credit attributable to inputs and input services used in, or in relation to the provision of exempted services subject to Rule 6 (3A)....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....01.04.2011 involves interpretation of law. 5. For the period prior to March 2011, the learned counsel submitted that trading cannot be considered as an exempted service. We find ourselves in agreement with the submission, since amendments in the relevant rules and provisions were brought in 2011 to deem trading as a service and separate exemption notification was issued making it an exempted service. Prior to that, if a service was non-taxable or exempt, it was to be considered as an exempted service and if common services were used for exempted services and taxable services/dutiable manufactured items, separate accounts were required to be maintained in respect of inputs and input services failing which there were statutory requirements t....