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2017 (12) TMI 27 - AT - Service TaxCENVAT credit - trading activities - The case of the appellant is that trading cannot be considered as exempted service - Held that: - A deemed fiction is apparently created by naming ‘trading’ as an exempted service by way of explanation in Rule 2 of Cenvat Credit Rule w.e.f. 01.04.2011. Prior to creation of such fiction, there is no scope at all even to consider the trading activity to be covered under the credit scheme. After the explanation, the position is more clear to the effect that the trading activity can be considered as an exempted service for the operation of scheme under Cenvat Credit Rules - the appellants should not have availed credit for common input services which are used for taxable output service as well as trading activity, as it is imperative to identify and reverse that amount of credit attributable to the trading activity - decided against assessee. Time limitation - penalty - Held that: - the trading is not at all an activity or a service covered by the Cenvat scheme prior to the introduction of clarificatory explanation - appellants have no reason to avail credit on services which they are fully aware were being used for trading activity also - there is no ground for such belief. Trading activity not being covered by the credit scheme itself during the material period, the appellants having availed the credit on such input services cannot contest the demand on limitation - penalty also upheld. Appeal dismissed - decided against appellant.
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