AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1737
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....rom the same registered manufacturing premises. Further the Appellant also found engaged in the activity of trading of 'Terani Clay Fints' and other products from other trading premises situated at old Madras Road. However, in addition to CENVAT credit on the inputs, capital goods and the input service relating to their manufacturing activity, appellant were also availing CENVAT credit on the inputs services like 'business support service' and 'security services' which were the common inputs services used for both manufacturing activities as well as trading activities. Thus, alleging that they have violated the provisions of the CENVAT Credit Rules, 2004 by not maintaining proper accounts of utilizing such credits, proceedings were initiated and show cause notice was issued on 29.04.2014 for the period from 2009-2010 to 2012-2013. Thereafter, Adjudication Authority as per the impugned order confirmed the demand along with interest and imposed penalty and appropriated the amount paid by the Appellant. Aggrieved by said order present appeal is filed. 3. When the appeal came up for hearing, Learned Counsel for the Appellant submits that the demand was confir....
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....t period and submits that definition of "exempted service" is provided at Rule 2(e) of Cenvat Credit Rules, 2004. With effect from 01.04.2011, the definition of exempted services underwent a change. The definition of exempted services prior to 01.04.2011 and subsequent to 01.04.2011 is reproduced below:- 2006 to 01.04.2011 "(e) "exempted services" means taxable services which are exempt from the whole of the service tax leviable thereon and includes services on which no service tax is leviable under section 66 of the Finance Act. 01.04.2011 onwards "(e) "exempted services" means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken. Explanation For the removal of doubts, it is hereby clarified that "exempted services" includes trading." 5.1. Thus, mention of trading as exempted service appeared in Chapter V of Finance Act, 1994 for the first time with ....
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....n the said demand as per the impugned order. Further, the appellant was under the bonafide belief that trading not being a service at all, there was no requirement to maintain separate accounts and the said issue was one of interpretation, and hence no suppression of facts with intent to evade payment of duty could be imputed against the appellant. This finding of the Commissioner is not tenable inasmuch the appellant had also furnished the details of the cenvat credit availed on the input services. 8. As regards the demand of Rs. 38,67,116/- for the financial year 2011-12, it is submitted that the appellant had already reversed the entire service tax credit availed on the common input services viz., 'Business support services' and 'security services' availed during the said financial year, totally amounting to Rs.4,73,009/ along with interest of Rs.1,14,146/- vide challan nos. 1003 dated 15.03.2013 and 10135 dated 06.05.2013, respectively. Since the appellant had reversed the entire cenvat credit availed on the common input services availed during the said financial year, it tantamounted to non availment of credit on the common input services and therefore the a....
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.... Counsel also draws our attention to the statement recorded from General Manager, Finance & Accounts Shri. Arul Raj on 26.07.2013 where it has specifically stated that on what basis the figures as arrived by the Audit as the transaction value of trading activity at works at Kolar is not at all as much what is shown in the audit note. Learned Counsel also draws our attention to the copy of the statement of the service tax credit availed on 'business support services' and 'security services' for the year 2009-2013 and the details of the sales from the manufacturing sales as Kolar, Old Madras godown, Bauxite Trading site at Kolar. Therefore, the value of trading of 'TMT bars' could not be included for determining the value of the traded goods for the purpose of calculating the amount to be paid in terms of Rule 6(3)(i) of the Cenvat Credit Rules, 2004. If at all, any amount, had to be paid in terms of the said Rule 6(3)(i) of the Cenvat Credit Rules, in respect of the trading activity, the value of the traded goods in the factory alone should have to be taken into consideration for arriving at the value of trading goods in terms of Explanation I (c) to the said....
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....rd both sides and perused the records. 13. As regards demand for the financial year 2009-2010 to 20102011, we find that the earlier Audit Party which had audited the records of the appellant for the period January 2009 to January 2010 also had all the details of the trading activity and the details of the credit availed on the input services before them but had not raised any objection obviously in view of the fact that during the said period the Department had not considered trading as an exempted service, so as to attract the provisions of Rule 6 of the Cenvat Credit Rules, 2004 and it was only after the insertion of the explanation to Rule 2(e) of the Cenvat Credit Rules, 2004, that 'exempted services included 'trading', by Notification No. 03/2011-CE (NT) dated 01.03.2011 the Department has been applying the said Explanation, retrospectively and raising the demand under Rule 6(3)(i) of the Cenvat Credit Rules, 2004. Since the issue regarding retrospective effect of amendment was finalized by Larger Bench in the matter of M/s. Dorma India Pvt. Ltd., the trading activity is considered as exempted service, retrospectively. 14. As regards demand for the financial ....