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2015 (11) TMI 1045 - AT - Service TaxCenvat Credit - Authorized Service Station Service and ‘Business Auxiliary Service’- Trading activity - Penalty u/s 77 & 78 - Held that:- the disputed input services have not been entirely used by the appellant for providing the taxable output services. Rather, some portion of the input services has been used for trading activity of selling cars. In my view, trading activity cannot be termed as a service . Accordingly, cenvat credit on input services attributable to trading activity will not be available to the appellant. In such eventuality, the only recourse left to the appellant is to segregate the quantum of input service attributable to trading activity and exclude the same from the records maintained for availment of credit, which in the present case, admittedly has not been done by the appellant. - matter remanded back for computation of amount of credit to be reversed - Decided against the assessee. Levy of penalty - Appellant was not in a position to maintain separate records with regard use of input services for the taxable services and for trading activity (which was not an exempted service at the material time), I am of the view that there is no contravention of the Cenvat rules, and as such, imposition of penalty under Section 77 of the Finance Act, 1994 is not justified. Further, in absence of any specific findings by the authorities below regarding the involvement of the appellant in activities concerning fraud, collusion, willful mis-statement or suppression of fact etc., with intent to evade Government revenue, I am of the considered view that penalty imposed under Section 78 of the Act has no leg to stand for legal scrutiny. - Decided in favour of assessee.
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