TaxTMI 
TaxTMI 
2017 (6) TMI 635
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....s and circumstances of the case, trading activity can be categorized as an exempted service for the purpose of invoking Rule 6 of Cenvat Credit Rules, 2002 prior to 1-4-2011. c) Whether in the facts and circumstances of the case, when trading was not a service or exempted service at the relevant time, requiring the appellant for reversal of any part of the credit on input services is legal? 2. In order to adjudicate upon the issues arising in the appeal, the following facts are required to be noticed: 2.1. The appellant herein is engaged in trading activities as well as in commission business. The record shows that the appellant during the relevant period traded in MS Scraps, MS Angles, CTD Bars, Shredded Steel Scrap, Iron ore, etc. The appellant, it appears, largely, bought and sold the aforementioned articles from M/s Essar Steels Ltd. 2.2. This apart, the appellant, as it emerges from the record, also acted as a commission agent for and on behalf of M/s Essar Steels Ltd. In its capacity as the commission agent, the appellant sold HBI fines, which emerges as a by-product in the process of manufacturing the steel to various parties on behalf of M/s Essar Steels Lt....
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.... not used for generating output services. The credit wrongly availed of, which was quantified as Rs. 7,01,979 was reversed, after making a suitable entry in the Cenvat Credit Account Balance leaving a closing balance of Rs. 28,359/- as on 31.03.2008. 3.2. The appropriate interest on this amount, which was quantified at Rs. 1,08,787/- upon paid by the Assessee, the common ground before us is that in so far as this aspect of the matter is concerned, there is no lis obtaining between the parties. 4. Continuing with the narrative, based on this ground, a Show Cause Notice dated 03.03.2009, (in short "SCN"), was issued to the appellant, to which, a reply was filed. 4.1. The stand taken by the appellant, in the reply, was that due to an incorrect audit objection with regard to the alleged excess utilization of Cenvat Credit qua the exempted services, the appellant had paid up the purported excess amount, which was, otherwise not payable. 4.2. The Adjudicating Authority, however, was not impressed with the stand taken by the appellant, and therefore, proceeded to reject its claim for refund with regard to both aspects, to which, we have made a reference above. 5. Being aggrieve....
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.... the imported goods. It is in this context that the Ld. Sr. Advocate for appellant has argued that the same should be computed with reference to clause (c) of Explanation I appended after Rule 6(3D) of Cenvat Credit Rules, 2004. The said provision as noted earlier was inserted with effect from 1-4-2011. The argument of the Ld. Sr. Advocate is that the said explanation only provides that procedure for computation and since this change is procedural in nature it will have a retrospective effect. Ld. Sr.Advocate also argued that in case of traded goods, the value addition by the appellant is only the difference between the sale price and the purchase price of the goods which is not so in the case of manufactured goods. On a query by the Bench that since Ld. Sr. Advocate is arguing that only the value addition should be taken in respect of the traded goods, then why the same criteria should not be applied in the case of manufactured goods i.e. take the differential amount between the selling price and cost of various raw materials. Ld. Sr. Advocate stated that in case of manufactured goods so many things go into production process like labour, electricity and many other services and it....
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....its enactment. In the present case, as mentioned earlier, it is not the computation of tax but apportionment of the credit of service tax on input services availed for manufactured goods and traded goods. As we have already held that trading was not a service and therefore cannot be considered as an exempted service before 1-4-2011, therefore, the substantive provision itself did not exist before the said date. Under the circumstances, we are of the view that the said judgment is not applicable in the facts and circumstances of the present case. 11) The Division Bench of Tribunal's decision (supra) is squarely applicable to the present case and the respondents are not eligible for the entire credit availed on the common input services. Since the department rightly demanded the excess credit of Rs. 6,78,459/- which is in excess of 20% of the total service tax payable, the respondents paid the excess amount and they are not eligible to take re-credit in cenvat account nor they are eligible for refund. The adjudication order rejecting the refund of Rs. 6,78,459/- and the interest amount is upheld and the L.A.A. Order allowing credit is liable to be set aside. 5.3. Accordin....
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.... time. 10.1 In this context, it may also be relevant to note, how exempted services was defined in Rule 2(e) of the 2004 Rules till 31.03.2011 and thereafter. Rule position till 31-3-2011 Rule 2(e): "exempted services" means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under Sec,.66 of the Finance Act" Rule position with effect from 31-3-2011 Rule 2(e): Exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under Sec.66 of the finance Act; and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. EXPLANATION: For the removal of doubts, it is hereby clarified that "exempted services" includes trading. 10.2. Clearly, both before and after amendment, "exempted services" meant those taxable services, which were exempt from whole of service tax and, included those services on which service tax was not leviable, under Section 66 of the Finance Act. The incl....