2017 (12) TMI 27

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....of Service Tax under the categories of "Authorized Service Station" and "Business Auxiliary Service". They have availed Cenvat credit of duty paid on various inputs and tax paid on better services in terms of Cenvat Credit Rules, 2004. 2. Upon scrutiny of the records maintained by the appellant, the officers noticed that the appellants availed Cenvat credit and used the same for payment of tax on output services. It was seen that the appellants were having trading activities which is not liable to Service Tax and accordingly credit taken on input services attributable to such trading activities was sought to be denied on proportionate basis. Proceedings were initiated which resulted in the impugned order. The original authority held as bel....

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....to the rule clarify that if any input or services are used for providing exclusively for exempted service the same cannot be availed as common input service." 3. The original authority followed the procedure for calculating the value of exempted service (trading) as per the provisions introduced vide Notification No.3/2011 CE NT dated 01.03.2011 as amended by Notification No.13/2011 CE NT dated 31.03.2011. Applying such calculation, the original authority held that credit amounts of Rs. 24,84,530/- and Rs. 31,74,799/- for the periods covered by two SCNs are recoverable from the appellant. He also imposed equal amount of penalties on the appellant in terms of Rule 15 of Cenvat Credit Rules, 2004. A further penalty of Rs. 5000/- each in res....

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.... input services and they had considerable turnover and income in trading activities. It is also admitted that the services on which credit have been availed are partly relatable to trading activities also. We note that the appellants contested the reversal of credit, to a proportionate extent, on the ground that trading is not an exempted service prior to the insertion of explanation and as such the provisions of Rule 6(3) will not apply. One main aspect is missed by the appellant in such argument. The case of the appellant is that trading cannot be considered as exempted service. It is clear that trading is not a taxable service also. In other words, trading is an activity which is not covered under the scope of Cenvat Credit Rules, 2004. ....