TaxTMI 
TaxTMI 
2017 (3) TMI 1355
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....istered under Service tax and they were availing Cenvat credit on inputs and Input Services. It came to the knowledge of the Department that M/s L G Electronics India Pvt. Ltd., were also engaged in trading of bought out items which included goods received from NIP area & exempted areas and also included imported goods & goods manufactured by others. It appeared to Revenue that M/s L G Electronics India Pvt. Ltd. were availing Cenvat credit on Service tax paid on input services such as Advertising Service, Consulting Engineer Service, Credit Rating Agency Service, Event Management Service, Sponsorship Service, Renting of Immovable Property Service etc. in their manufacturing premises at Noida. It appeared to Revenue that entire Cenvat credit of Service tax paid on said services was availed by M/s L G Electronics India Pvt. Ltd. even when the said services were used in the activity of manufacture as well as in the activity of trading of goods. It further appeared to Revenue that Cenvat credit of Service tax paid on the services which were attributable to trading of goods was not admissible to appellants under the provisions of Cenvat Credit Rules, 2004. Therefore, the appellants wer....
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....ht to be disallowed and recovered under Rule 14 of Cenvat Credit Rules, 2004 read with proviso to Section 11A of the Central Excise Act, 1944. Through the said Show Cause Notice M/s L G Electronics India Pvt. Ltd. were called upon to show cause as to why Cenvat credit of Rs. 45.63 Crores, wrongly availed on input services during the period from April, 2006 to October, 2010, attributable to trading activity (Domestic + Exports) including GSM (Mobile Phones) exempted should not be disallowed and recovered with interest under Rule 14 of Cenvat Credit Rules, 2004 read with proviso to Section 11A of the Central Excise Act, 1944. It, further, proposed to appropriate Cenvat credit to the extent of Rs. 40,94,12,880/- reversed by M/s L G Electronics India Pvt. Ltd. There was a proposal to impose penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Further, Shri B. B. Sharma (Deputy Manager Commercial), Shri Ashish Agarwal (Head Finance & Taxation), Shri H. C. Moon (Vice President) & Shri C. S. Lee, (CFO) were called upon to show cause as to why penalty should not be imposed upon each of them under Rule 26 of Central Excise Rules, 2002 fo....
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....upon the other noticee. The said Show Cause Notice dated 09/05/2011 was decided through impugned Order-in-Original dated 13/07/2012. The Original Authority has identify the issues to be decided as to (i) whether trading activity can be called a service, (ii) whether Rule 6 of Cenvat Credit Rules, 2004 & Service Tax Credit Rules, 2002 would be applicable when input services are used in respect of trading activity as well as the taxable services (iii) if Cenvat Credit Rules & Service Tax Credit Rules are not applicable then the procedure that will be followed by the assessee for availing input service tax credit. The Original Authority has held that trading activity cannot be called a service. The Original Authority has further held that Sub-rule (3) of Rule 6 ibid provided that where output service provider does not maintain separate account, he has to follow the procedure or avail the options available under that Rule but that Rule is applicable only when the output service provider is providing services which are chargeable to Service tax as well as the exempted services and that similar is the situation when Sub-rule (3) of Rule 6 ibid is examined and that both the said Rules cle....
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....n (Vice President), Shri C. S. Lee (CFO) were liable to be imposed with penalty and imposed penalty of Rs. 4crore on each of them under Rule 26 of Central Excise Rules, 2002. Aggrieved by the said Order-in-Original appellant is before this Tribunal. 3. The grounds of appeal are as follows:- A) They contended that there was no dispute revised by the department that the said services were input services and the same were not used in or in relation to the manufacture of final product and that only case of the department was that the said services were also used in relation to trading activity and that as per Rule 3 of Cenvat Credit Rules, 2004 appellants were entitled for said Cenvat credit. B) They contended that the entire credit of Service tax was eligible on the Services falling in inclusive part of the definition of input services and there was no need to establish utilization of same in the manufacture. C) They contended that the ld. Commissioner in the impugned order has held that Rule 6 of Cenvat Credit Rules, 2004 was not applicable in the present case. Therefore, the question of calculation of attributable credit does not arrive. They have further contended that with....
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....rsal of credit on input services proportionate to the trading activity. He has further submitted that input services were not exclusively attributable to trading activity and hence, they were not inadmissible under Rule 3 of Cenvat Credit Rules, 2004. He has further contended that once admissible Cenvat credit has been taken and utilized then subsequent events will not affect the admissibility of the credit. He contended that the Original Authority has held that there is no provision to cover situations where one activity of appellant is manufacture and another activity is neither a service nor manufacture and further provided a remedy on his own by stating that the appellant should ensure that once in a quarter or in a six month, the quantum of input service tax credit attributable to trading activities according to standard principles of accounting should be debited by the appellant. On such findings, ld. Counsel for the appellant has contended that it was held by Hon ble Supreme Court in the case of C.I.T., Bangalore Versus B. G. Srivnivasa Setty reported at (1981) 2 Supreme Court Cases 460, When there is a case to which computation provisions cannot apply at all, it is evident ....
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....High Court has found the same to be unsustainable. Therefore, the basis of computation in the impugned show cause notice is not sustainable. 5. Heard the ld. D. R. who has stated that taking of Cenvat credit on trading goods is not covered under the scheme of Cenvat credit and that with effect from 01/04/2011 trading has been included in exempted service, therefore, Cenvat credit attributable to trading activity was not admissible to the appellant and that since they did not maintain separate account of input service, the show cause notice is sustainable. He has further contended that the appellant did not provide information to the department regarding trading activity, therefore, the extended period of limitation was invokable. Further, he has supported the impugned Order-in-Original. 6. Having considered the rival contentions and on perusal of record, we find that in the present case, M/s L G Electronics India Pvt. Ltd., was manufacturing the goods and also trading the goods on being imported and being procured from other manufacturers. They were taking Cenvat credit on service tax paid on input services as stated earlier. The show cause notice has proposed to recover Cenvat C....