AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 376
X X X X Extracts X X X X
X X X X Extracts X X X X
....it of the appellants, it was observed that they were providing taxable service of 'Authorized Service Station' and also engaged in the insurance, renting, courier, telephone, maintenance and repair of machineries, training of staff with respect to service of vehicles etc. It was alleged that while certain input services like maintenance and repair of machinery, training of staff, AMC of capital goods etc were used exclusively for running the authorized service station, all other services had been used commonly for both the taxable service and trading of goods, which is not taxable and hence not eligible to Cenvat credit under the Cenvat Credit Rules, 2004 (CCR). It was also alleged that the admissibility of Cenvat credit in such cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal, wherein the Commissioner (Appeals) rejected the appeal of the appellants. Aggrieved from the same, the appellants have filed this appeal. 3. Ld. C.A. for the appellants submits that the trading activity was brought under the definition of exempted services w.e.f. 01.04.2011, when an explanation was added to the definition of exempted service. Further, he submitted that the trading activity cannot be treated as service on the basis of CCR, 2004, otherwise it will be in direct conflict with the substantive provision of the law, because if trading was not a service at all, it could not be treated as an exempted service. He argued that the question involved interpretation, which got clarified only on 01.03.2011 by insertion of trading ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns of sub-rule 3 of the Rule 6 of the CCR, which could not be applied prior to 01.04.2011. Hence, the view of the department that the appellants were not entitled to Cenvat credit for not maintaining separate account is not correct. At the same time, credit could not be allowed against trading activities since it was neither a service falling under Finance Act, 1994, nor "manufacture" under the Central Excise Act, 1944. Therefore, the portion of input service credit availed for trading activity is not admissible. The question of how to arrive at that portion of input service as has been availed against the trading service when the appellants did not maintain separate accounts. In a similar situation, this Tribunal in the case of Orion Appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uantum of trading activity and other activity which is liable to service tax. The only obvious solution which would be legally correct appears to be to ensure that once in a quarter or once in a six months, the quantum of input service tax credit attributed to trading activities according to standard accounting principles is deducted and the balance only availed for the purpose of payment of service tax of output service. This proposition is not against the law in view of the fact that there are several decisions of various High Courts and also of the Tribunal wherein a view has been taken that subsequent reversal of credit amounts to non-availment of credit. 9. I am conscious of the fact that the decision or the conclusion reached by me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch a case. The relevant findings of the Tribunal in that case are reproduced below: "8. To invoke the extended period, there should be suppression or willful misstatement with intention to evade payments of duty. The issue reveals an interpretational issue where in the department is of the view that even while engaging in trading activity, the appellant has to maintain separate accounts in order to avail credit when inputs are used in common. Whereas, the appellant was under the belief that trading not being a service at all there is no requirement to maintain separate accounts. On such score, there is nothing to establish suppression or willful misstatement with intention to evade payment of duty on the part of appellants. I therefore f....