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2016 (5) TMI 135 - CESTAT MUMBAI

2016 (5) TMI 135 - CESTAT MUMBAI - TMI - Disallowance of Cenvat credit - Insurance Auxiliary Service - Availed Cenvat Credit in respect of certain service which is exclusively used for non taxable activity that is auction sale abandoned cargo and export of stuff cargo - Appellant contended that auction of abandoned goods being a trading activity is not a exempted service as the trading activity was covered under the definition of exempted service only w.e.f. 01.04.2011. - Held that:- even pr .....

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of sale of abandoned cargo itself was alarm to the appellant that whether the Cenvat Credit should be availed on the input service used in the auction sale of abandoned cargo. Therefore despite knowing all the facts, the appellant kept on availing Cenvat Credit. As regard details of availment of Cenvat Credit on the nature of input service is not known to the department therefore it cannot be accepted from the department to issue show cause notice within 1year unless until the facts are unearthe .....

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involved in the first show cause notice, therefore in the subsequent show cause notices it cannot be said that there is suppression of fact on the part of the appellant, nor it can be said that the department had no knowledge about the fact of the case after issuance of first show cause notice. Therefore penalty under Section 78 is not sustainable corresponding to demand of Cenvat Credit for the period after September 2005 but sustainable for the period October 2003 to September 2005. - Decided .....

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iding the cargo handling services. They have availed Cenvat Credit in respect of certain service which is exclusively used for auction of abandoned goods. The appellant have not discharged the service tax on the auction sale of abandoned goods. They have also availed the Cenvat Credit in respect of Insurance Auxiliary Service which is used for export stuff cargo on which no service tax was paid. The Cenvat Credit was disallowed by the adjudicating authority on the ground that these services were .....

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the abandoned goods is a trading activity on which the appellant is paying VAT. Being a trading activity it is not a exempted service as the trading activity was covered under the definition of exempted service only w.e.f. 01.04.2011, therefore there is no bar in availing the Cenvat Credit on the input service which is used in trading activity. He further submits that the department has been issuing the show cause notices for demanding service tax on the auction sale of abandoned goods therefor .....

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ear period i.e. for the period October 2003 to September 2005, the show cause notice was issued on 3.10.2006. There is no suppression on the part of the appellant. He submits that the issue involved is an interpretation of law as the department itself was not clear whether the auction sale of abandoned goods are taxable or otherwise. Therefore in this situation, it cannot be said that there is a suppression of fact on the part of the appellant. Hence, the show cause notice for the period beyond .....

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e other hand, Shri B.Kumar Iyer, the Ld. Supdt. (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that admittedly the appellant availed the Cenvat Credit in respect of input service which was exclusively used for non-taxable activity such as auction sale of the abandoned goods and export cargo. He submits that as per definition, input service is such service which is used for providing output service. In the present case there is no output servic .....

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larified that as regard auction of abandoned cargo by the CFS, no cargo handling service can be said to have been rendered in such cases, therefore service tax is not leviable. In this position, Cenvat Credit on the input service cannot be allowed as the same was used for auction of abandoned goods. As regard limitation he submits that it is not the bona fide belief of the appellant for wrong availment of the Cenvat Credit. Since the proceeding on the question whether the auction of abandoned ca .....

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bmissions made by both the sides. I find that the appellant availed the Cenvat Credit in respect of input service which were exclusively used for non taxable activity that is auction sale abandoned cargo and export of stuff cargo. This is not the case where the appellant has availed Cenvat Credit in respect of common services used for taxable and non taxable services. Since the services are exclusively used for non taxable activity the appellant was not entitled for the Cenvat Credit at the firs .....

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e on the input service used in such output activity as per the definition of input service. I am therefore of the view that the Cenvat Credit on the input service used for auction sale of abandoned cargo and export cargo is not admissible to the appellant. As regard limitation, I find that the demand proceeding on the auction of sale of abandoned cargo itself was alarm to the appellant that whether the Cenvat Credit should be availed on the input service used in the auction sale of abandoned car .....

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