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2017 (9) TMI 1869 - AT - Central ExciseCENVAT Credit - common input services used for the manufacturing activity of finished goods and for the trading activities - input services - Management Consultancy Services - HELD THAT:- The provisions of Cenvat Credit Rules were amended by insertion of an explanation which indicated trading activity is an exempted services. Hon’ble High Court of Madras in the judgment of M/S. FL SMIDTH PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE [2014 (12) TMI 699 - MADRAS HIGH COURT], settled the law that explanation inserted from 1-4-2011 will apply for the period prior to 1-4-2011 also and following the said ratio, it is held that the trading activities undertaken by the appellant during the period in question has to be treated as an exempted services - Since it is undisputed that appellant is manufacturer of excisable goods and is discharging appropriate central excise duty, the proportionate Cenvat credit attributable to the trading activity needs to be reversed and the same should be arrived based upon the provisions of Rule 6(3A) of the Cenvat Credit Rules, 2004. CENVAT Credit - input services - Management Consultancy Services - HELD THAT:- The said sub-rule starts with a non obstante clause, which would mean that this sub-rule has to be read independently and it provides for availment entire Cenvat credit even if the same is used for manufacturing of dutiable and exempted goods and are providing taxable and exempted services. In my view, appellants have made out a case for availment of the entire Cenvat credit of the service tax paid on Management Consultancy Services as per the above reproduced sub-rule - demand set aside. Demand of interest - HELD THAT:- Since the demands are set aside on this ground, the question of interest does not arise. Penalty - HELD THAT:- Since the issue is of interpretation no penalty is warranted on the appellant - The penalties are set aside. Appeal allowed - decided in favor of appellant.
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