TaxTMI 
TaxTMI 
2026 (7) TMI 1535
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....8 (impugned order), whereby, the Commissioner (Appeals), upheld the Order-in-Original confirming recovery of Cenvat Credit amounting to Rs. 47,85,924/- along with applicable interest and penalty. 2. The fact in brief is that the appellant is engaged in the manufacture of missiles and special purpose motor vehicles falling under the Central Excise Tariff. Besides manufacturing excisable goods, the appellant also procures certain bought-out items from independent vendors and supplies the same to its customers under contractual obligations. Such bought-out goods are sold as such on payment of applicable VAT-CST without undergoing any manufacturing process. The appellant has stated that these bought-out goods are not used in or in relation t....
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....e entire demand proceeds on an erroneous assumption that purchase and sale of goods amounts to an exempted service. It is argued that transfer of title in goods is purely a sale transaction governed by the Sale of Goods Act and subjected to VAT. Such activity cannot simultaneously be regarded as a service. 7. It is further submitted that bought-out goods are not inputs in manufacture of the appellant's final products. Since no Cenvat credit was availed on such goods, the provisions of Rule 6 are wholly inapplicable. 8. The Learned Counsel contends that Rule 2(e) defining exempted service applies only to services and cannot enlarge the definition so as to convert this of goods into a service. Reliance is placed upon the decision of the....
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....cise and Service Tax [2017 (6) TMI 635 - Madras High Court] (iv) Lally Automobiles Pvt Ltd., Vs Commissioner of Central Excise [2018 (7) TMI 1679 - Delhi High Court] (v) M/s IFB Industries Ltd., [2016 (44) S.T.R 284 (Tri-Del)] 11. It is submitted that these decisions uniformly hold that trading is an exempted service after insertion of the explanation and proportionate reversal of under Rule 6 is mandatory. 12. Heard both the sides and perused the records. 13. The following issues arise for determination. i) Whether trading of bought-out goods constitutes exempted service for purposes of Rule 6 of Cenvat Credit Rules, 2004? ii) Whether the appellant was required to include the value determined un....
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.... has been place upon Orience Appliance Ltd., supra, we find that the said decision was rendered before the statutory amendment. It is a settled principle that where Parliament subsequently amends the law, earlier judicial precedents based upon the unamended provision cease to govern the field. The ratio of Orience Appliance therefore cannot override the amended Rule 2(e). The Commissioner (Appeals), therefore, rightly distinguished the said judgment. 17. The revenue has placed reliance upon CBEC Circular No. 943/04/2011CX dated 29.04.2011. The circular explains the legislative intent behind insertion of the Explanation to Rule 2(e). It categorically clarifies that trading is to be treated as an exempted service for the purpose for Rule 6....
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....n credit was mandatory. Being the decision rendered by the Jurisdictional Bench on identical statutory provisions, we find no reason to take a different view. Judicial discipline requires us to follow the ratio laid down therein. 20. The Madras High Court in M/s Ruchika Global Interlinks, supra, examined the scope of amendment introducing trading within exempted services. The High Court held that the Explanation inserted the Rule 2(e) is clarifictory in nature. The Court further observed that even prior to the amendment, the legislative intention was to exclude common credit relatable to trading activities and the Explanations merely removed doubts. This authoritative pronouncement of the High Court fortifies the revenue's contention tha....
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....e, insurance, professional services, management services and other common services used for both manufacturing and trading activities. Rule 6 does not require reversal because credit has been taken on traded goods. Rather, it requires reversal because common input service credit attributable to exempted activity cannot be retained. Therefore, non-availment of credit on traded goods is wholly irrelevant. 24. The appellant also challenges invocation of extended period. The records reveal that while computing reversal under Rule 6, the appellant omitted the trading value required under the statutory formula. Such omission resulted in short reversal of credit. Following the ratio laid down by the Delhi High Court in Lally Automobiles Pvt Ltd....