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2023 (12) TMI 1208 - AT - Central ExciseCENVAT Credit - trading activities/exempt services - Management Consultancy Service - service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted service - absence of ISD registration at the time of availing credit - extended period of limitation. CENVAT Credit - trading activities/exempt services - Management Consultancy Service - service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted service - HELD THAT:- As far as admissibility of cenvat credit of trading activity, the Hon’ble Madras High Court in Ruchika Global Interlinks [2017 (6) TMI 635 - MADRAS HIGH COURT] held Having regard to the rule, position and given the admitted fact that no separate accounts were maintained by the appellant, with regard to the taxable and non-taxable services, clause (c) of sub-rule (3) of Rule 6 of 2004 Rules would apply. Further, the Hon’ble Delhi High Court in Lally Automobiles Pvt. Ltd. [2018 (7) TMI 1679 - DELHI HIGH COURT] held In the present case, the assessee’s argument that there is no mechanism to reverse credit, once taken, in the opinion of this Court, cannot be accepted. The assessee was well aware of the exact nature and extent of its service tax liability. It was also aware of the eligible service tax inputs. Therefore, when it did claim successfully and unchallenged input credits in respect of activities that were not subjected to service tax levy, it was aware that the claim was excessive and could not be justified. Extended period of Limitation - HELD THAT:- On the issue of invoking extended period of limitation on similar circumstances, lordships of Delhi High Court held that Being conscious of its trading activity and that it was not liable to service tax (since it did not include the amounts earned from that business, in its returns) meant that the assessee was aware of what it was doing. It cannot now take shelter under the plea that non-trading activity was expressly exempt from claiming credit, in 2011. That amendment made no difference, given that trading was never taxable under the Finance Act, 1994. In these circumstances, the Revenue was justified in invoking the extended period of limitation in this case - Thus, the confirmation of demand with interest by the learned Commissioner invoking extended period of limitation on cenvat credit availed on trading activity is upheld. CENVAT Credit - absence of ISD registration at the time of availing credit - HELD THAT:- The issue is also covered by the judgment of the Hon’ble Karnataka High Court in the case of Hinduja Global Solutions Ltd, [2022 (4) TMI 71 - KARNATAKA HIGH COURT]. Their Lordships following the judgment of Hon’ble Gujarat High Court and Madras High Court, held that cenvat credit cannot be denied to the assessee prior to its registration as an ISD, since the same is procedural irregularities - the appellant is entitled to avail cenvat credit of Rs.15,83,168/-. Thus, the impugned order is modified to the extent of confirming inadmissible cenvat credit of Rs.79,22,225/- attributable to trading activity and applicable interest of Rs.15,38,789/- paid on the said credit amount; since the cenvat credit and applicable interest is paid much before the issuance of show-cause notice, the appellant is entitled for the benefit of 25% of penalty imposed under Section 11AC of the Central Excise Act read with Rule 15(4) of CENVAT Credit Rules, 2004 - demand of cenvat credit of Rs.15,83,168/- confirmed with interest and equivalent penalty before ISD registration is hereby set aside. Appeal disposed off.
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