TaxTMI 
TaxTMI 
2017 (8) TMI 833
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....e adjudicating authority dropped the demand proposed in the show cause notice for reversal of Cenvat credit attributable to trading activity on proportionate basis, as alleged in the show cause notice, amounting to Rs. 1,33,05,840/-. The Revenue has filed the present appeal by taking the view that the respondent has engaged in the activities of manufacturing, trading and services. Since, the activity of trading is not liable to payment of service tax, it falls within the category of exempted services, as per Rule 2 (e) of the Cenvat Credit Rules, 2004. Hence, this attracts the mischief of Rule 6 (3) of CCR, 2004. Consequently, the respondent is liable to reverse Cenvat credit attributable to trading activity on proportionate basis. In the p....
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....an.) ii. Franke Faber India Ltd. Vs CCE, Aurangabad 2017-TIOL-353-CESTATMum. iii. Kundan Cars Pvt. Ltd V/s CCE, Pune 2016-TIOL-1088-CESTAT-MUM iv. Marudhan Motors V/s Commissioner of Central Excise and Service Tax, Jaipur-II 2016-TIOL-2576-CESTAT-Del. 5. We have heard both sides and perused the appeal records. 6. We find that the Cenvat Credit Scheme is available only in respect of an assessee, who is either manufacturing dutiable final products or providing taxable output service. Admittedly, during the relevant time, trading is not categorized as service at all. It is only in 2011, the explanation was inserted under Rule 2 (e) of CCR, 2004 to the effect that "exempted service" includes "trading". Prior to that date, trading is not ev....
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....ecided by the Tribunal in Mercedes Benz India Pvt. Ltd. - 2014 (36) STR 704 (Tribunal-Mumbai). The said decision was affirmed by the Hon'ble Bombay High Court reported in - 2016 (41) STR 577 (Bombay) and SKF India Ltd. (ISD) - 2016 (44) STR 61 (Bombay). 9. As such, we hold that the findings of the Original Authority that the demand for reversal is made in vacuum without support of provisions of law, is legally unsustainable. As noted above, input service credit available is only when output service is taxable. If there is no output service, no credit can be taken. Since trading, during the material time, is not even considered as an "exempted service", it necessarily follows that no credit on input services used for trading activities can....