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2021 (11) TMI 899 - AT - Service TaxCENVAT Credit - input services common to both taxable as well as exempt services - Rule 6(3A) of CCR,2004 - adjudicating authority dropped the demand for the period prior 1.4.2011 on the ground that trading is classified as an exempted service only from 1.4.2011 - whether the turnover of a particular unit should be taken into consideration for arriving at the amount of tax credit to be reversed in terms of Rule 6(3A) of CENVAT Credit Rules, 2004? - HELD THAT:- For the period 01.04.2011, the issue stands decided in the case of MERCEDES BENZ INDIA PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-1 [2014 (4) TMI 12 - CESTAT MUMBAI] wherein it was held that trading is not an exempted service prior to 01.04.2011; provisions of Rule 6 requiring reversal of 6% of trading turnover is not applicable. We also find that the matter prescribed under Rule 6 of CCR, 2004, can be applied for the period before 01.04.2011 also as held by the Tribunal in the case of M/S TFL QUINN INDIA PVT. LTD. VERSUS CC & CE, HYDERABAD-IV [2016 (6) TMI 230 - CESTAT HYDERABAD]. It is not coming forth from the records of the case as to whether the Department has appealed against such order and if so, the outcome of the same. While holding that the Department is not precluded from issuing SCN to the head office of the Respondents as res judicata would not apply to taxation matters, it is found that there is a dichotomy in the approach of the appellant department. The benefit of doubt should go the appellants. Coming to the period subsequent to 01.04.2011 when trading came to be considered as an exempted service, we find that the appellants have reversed credit, of ₹ 27,37,30,026/- for the period 2011-12 to 2014-15, in terms of Rule 6(3A) of CCR, 2004, on proportionate basis - Hon’ble Karnataka High Court has dealt with the very same issue in the case of THE COMMISSIONER OF CENTRAL EXCISE BANGALORE - IV (ERSTWHILE BANGALORE - II) COMMISSIONERATE VERSUS M/S. ITC LIMITED [2021 (5) TMI 366 - KARNATAKA HIGH COURT] and the Hon’ble High Court has held relying on the Division Bench decision in the case of COMMISSIONER OF C. EX., BANGALORE-I VERSUS ECOF INDUSTRIES PVT. LTD. [2011 (2) TMI 1130 - KARNATAKA HIGH COURT] held that there are only two limitations imposed under Rule 7 of the Rules, for distribution of credit by an Input Service Distributor. The learned Commissioner’s order is legal and proper and as such does not require any interference - appeal dismissed.
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