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TMI Blog2014 (7) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... - under Rule 14 of the Cenvat Excise Act, 1944 along with interest thereon and also imposing equivalent amount of penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1994. Another penalty of Rs. 1,11,444/- has also been imposed on the appellant. The reason for denial of credit is that the credit taken is attributable to trading activities undertaken by the appellant and therefore, it is not eligible to be taken. Aggrieved of the same, the appellant is before us. 2. The learned Consultant for the appellant submits that in this particular case, the credit has been taken on the strength of the invoices issued by their Head Office, which was registered as an Input Service Distributor (ISD) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant is entitled for the credit taken on trading activities as per the formula prescribed with effect from 01/04/2011. It is also his argument that the appellant was under the bonafide belief that the trading was an exempted service and therefore, credit could be taken on common input services used in dutiable goods as well as exempted services as provided under the Cenvat Credit Rules, 2004. He also refers to Delhi High Court's decision in the case of Lally Automobiles Pvt. Ltd. Vs. CCE dated 06/09/2013 wherein the Hon'ble High Court directed pre-deposit 50% of the credit involved without interest in a similar case and therefore, the same be followed in the present case also. It is also his contention that in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 2 (e) of Cenvat Credit Rules, 2004 clarifying that "exempted services", includes trading is only prospective in effect and trading is not a service prior to 01/04/2011. In the said decision, it is further held that for the period prior to 01/04/2011, the credit of Service Tax paid on common input services should be apportioned in the same ratio as the turnover of the manufactured and traded items. Therefore, in the present case, the ratio of this decision would apply and the appellant should be put to terms. 4. We have carefully considered the submissions made by both the sides. 4.1 As regards the question, who can initiate the proceedings for recovery of the credit wrongly taken, Rule 14 of the Cenvat Credit Rules, 2004 makes this pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion whether trading could be considered as an exempted service prior to 1-4-2011 in view of the explanation inserted in Rule 2(e) of CCR, 2004, and if credit is not admissible, what is the methodology that should be adopted for quantification of ineligible input service tax attributable to trading activities, all these issues have been examined at length in the Mercedes Benz India Pvt. Ltd. case (cited supra). IN the said decision it was held categorically that prior to 01/04/2011 trading cannot be considered as an exempted service. In the said decision, it was also held categorically that prior to 01/04/2011 trading cannot be considered as an exempted service. In the said decision, it was held categorically that apportionment of input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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