TaxTMI 
TaxTMI 
2016 (6) TMI 230
X X X X Extracts X X X X
X X X X Extracts X X X X
....vity. The period involved is from 2006-07 to 2010-11. The department entertained the view that trading activity is an exempted service. Thus as per Rule 6 of CENVAT Credit Rules, 2004, when common input/input services are used in exempted as well as dutiable final products/output services, the appellant has to maintain separate accounts. The appellant failed to keep such separate accounts and are liable to pay an amount equivalent to the CENVAT credit attributable to the input services used in providing trading activity i.e. exempted services. 2. A show-cause notice was issued raising the above allegation and demanding an amount of Rs. 4,76,651/- being the irregularly availed credit on trading activity, along with its interest and also t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g and trading activity. He contended that prior to 01/04/2011 there was confusion and doubt as to whether trading is exempted service or not. As per Rule 6 of CENVAT Credit Rules, 2004, separate accounts have to be maintained when the manufacturer is engaged in providing exempted service or exempted goods. The appellants believed that trading being not exempted service, they need not maintain separate accounts. Therefore there was no suppression or willful contravention of provisions to evade payment of duty and that the demand raised invoking extended period is not sustainable. The learned counsel drew support from the judgment laid in Krishna Auto Sales Vs. CCE, Chandigarh [2015(40) STR 1121 (Tri. Del.)]. 4. In addition, the learned co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all supported the findings in the impugned order. He submitted that the appellant is not eligible for the credit availed on common input services which were used for trading activity. As the appellant is not eligible to avail the credit, they are liable to reverse the same. The computation method adopted by the appellant is applicable only w.e.f. 01/04/2011. The computation was done by department adopting the method that existed then, though it did not include the case of trading. Further that the extended period has been rightly invoked as the appellant suppressed the fact that common input services were used for trading activity also. He pleaded that the appeal may be dismissed. 6. I have heard both sides. One of the vehement argument ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that department was aware of the fact that appellant was engaged in trading activity also. The show-cause notice is issued after trading was brought under category of exempted service. It is clear that the issue was contentious, prior to 01/04/2011. In the present case, there is no evidence to establish that there was suppression of facts or willful misstatement on the part of appellants with intention to evade payment of duty. The Hon'ble Supreme Court in the case of Continental Foundation Vs. CCE, Chandigarh reported in 2007(216) ELT 177 (SC) held that the expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as "fraud" or "collusion" and therefore has to be construed strictly....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of computation available was the method in case of exempted services and original authority adopted such method. The computation method taken by the appellant to arrive at the figure Rs. 2,74,122/- is the method for computing in case of trading w.e.f. 01/04/2011. As this is the formula/method provided by legislature for computing value in case of common inputs/input services used for trading activities when there is no separate accounts, I am of the view that application of this method to arrive at the value would be more appropriate though it was introduced w.e.f. 01/04/2011 only. Therefore, I direct the jurisdictional Superintendent to compute the value/amount of credit of common input services attributable to trading activity falling wi....