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2017 (3) TMI 1355 - CESTAT ALLAHABADReversal of credit on input services proportionate to the trading activity - common input services were used for trading of goods as well as for manufacture. It appeared to Revenue that Rule 6 of CCR, 2004 was applicable only when the manufacturer or output service provider as the case may be is engaged in both manufacture of excisable goods and exempted goods or in providing output service and exempted services as the case may be and that trading activity was neither manufacture nor taxable service, and further that the Credit of Service Tax paid on Services attributable to trading was void ab-initio and there was no application of Rule 6 to trading activity - recovery u/r 14. Held that: - It is very clear that for recovery of Cenvat credit under said Rule 14 first it is to be established that Cenvat credit has been either taken wrongly or utilized wrongly. Further, the said Rule 14 has also been provided for recovery of amount mentions in Sub-rule (3) of Rule 6 of CCR under Explanation 2 under Sub-rule 3 of said Rule 6. The provision at Explanation 2 under Sub-rule (3) of said Rule 6 provide for recovery of Cenvat Credit which was admissible at the time of taking credit In the present case, admittedly, there is no allegation in the said SCN that the appellants had taken credit of any inadmissible Cenvat credit. Further the SCN dated 09/05/2011 states that Rule 6 of CCR, 2004 is not applicable in the present case. Therefore, the said SCN did not make out a case for invocation of provisions of Rule 14 of Cenvat Credit Rules, 2004. Therefore, SCN was not sustainable for the reasons that the contention in the SCN did not allow recovery of Cenvat Credit u/r 14 of CCR, 2004. Appeal allowed - decided in favor of appellant.
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