2018 (9) TMI 981

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....For the Respondent : Shri B. Balamurugan, AC (AR) ORDER The appellants are manufacturers of CNC machines and are availing the facility of CENVAT credit on inputs, capital goods and service tax credit on inputs service. On verification of records, it appeared to the department that when the appellants removed inputs as such, the activity tantamounts to trading activity and therefore are not e....

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.... input credit amounts to trading activity and therefore the appellants having not maintained separate accounts is not entitled to the credit on common input services for the trading activity. He explained that the appellant is not engaged in any trading activity and the inputs were removed as such as per Rule 3(5) of CENVAT Credit Rules, 2004. Since there is no trading activity, the allegation tha....

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....s nothing but a trading activity. Hence having not maintained separate accounts for the common input service used for manufacture of finished goods as well as trading activity, they are liable to pay the amount as contemplated under Rule 6(3A) of CENVAT Credit Rules, 2004. 4. Heard both sides. 5. On perusal of the show cause notice, it is seen that the allegation against the appellant is tha....

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.... for the clearance of final products. The Tribunal in the case of Lakshmi ring Travellers (CBE) (supra) had occasion to consider the very same issue and observed as under:- "5. It is brought out from the facts that the appellant has reversed the credit when the inputs are removed as such from the factory. The department has taken the view that such removal amounts to trading and has direc....