TaxTMI 
TaxTMI 
2024 (11) TMI 1229
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....Prerana Motors, are providers of services of Repair, reconditioning, restoration and decoration of motor vehicles and Business Auxiliary Services. During audit, it was noticed that the appellant was availing cenvat credit of service tax paid in respect of input services. Since the appellant was also undertaking trading activities, which are considered as exempted services, they were not eligible for cenvat credit on such trading activities. Accordingly, duty demand of 6% / 7% was confirmed on the value of the exempted services provided in terms of Rule 6(3) of the Cenvat Credit Rules (CCR), 2004; therefore, Rs.9,79,968/- was confirmed along with interest and equivalent amount of penalty was imposed under proviso to Section 73(1) of the Fina....
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....stan Steel Ltd. vs. M/s. State of Orissa: AIR 1970 (SC) 253. 3.1 With regard to the trading activity, it is submitted that the appellant sells spare parts and other goods as consumables in the course of providing repair and maintenance services, which cannot be considered as trading. It is not a separate sale of goods with the provision of service but inseparable works contract, therefore, there is no exempted service and the question of reversing the cenvat credit does not arise. However, it is further claimed that even if the department considers it as an exempted service, then the cenvat credit reversal should have been demanded only on proportionate basis and not on 6% / 7% of the exempted in terms of Rule 6(3) of the Cenvat Credit R....
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....o. 20158/2019 dated 12.02.2019, the Tribunal observed as follows: "6. After considering the submissions of both sides and perusal of the material on record and the various decisions, I find that the Commissioner (Appeals) has dropped the demand for the period 2008-09 to 2010-11 on the ground that the activity of trading in spares by the appellant cannot be treated as an exempted service for the period prior to 01/04/2011 since Notification No.3/2011 dt. 01/03/2011 inserting the Explanation "For the removal of doubts, it is clarified that exempted services including trading in the definition of exempted service was effective only from 01/04/2011" and the Department has not filed any appeal against the dropping of the demand for the ....
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....irmation from department on merits in their own unit at Bangalore South for the period 01.04.2011 to 31.03.2012. This clearly establishes that appellant had suppressed this fact and continued to avail the credit, the fact that they have filed the returns regularly does not absolve them from their liability. As clearly held by the Commissioner (Appeals), the appellant working under self-assessment procedure had to comply with the relevant Act and Rules especially when the issue was already known to them. Hence, the credit on the exempted product both on merits and limitation is upheld. 5.3. However, taking into consideration the fact that Rule 3AA of the Cenvat Credit Rules, 2012 which reads as follows: "(3AA)[ Where a manufactur....