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2016 (5) TMI 310 - CESTAT MUMBAI

2016 (5) TMI 310 - CESTAT MUMBAI - 2016 (43) S.T.R. 630 (Tri. - Mumbai) - Disallowance of Cenvat credit and recovery of interest - Authorized Service Station, Business Auxiliary Services and Servicing of Motor Vehicles on which the service tax is paid - engaged in trading activity of passenger cars purchased from the manufacturer supplier on which no service tax is paid - availing Cenvat Credit on various common input service - Revenue contended that appellant were availing Cenvat Credit in resp .....

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that the GTA service has no nexus with the taxable service such as Authorized Service Station and Business Auxiliary Service. This Tribunal has held that no arithmetical correlation is required between the input and output services and accordingly the credit was allowed. In the case of Shariff Motors similar facts was involved that the assessee had availed the Cenvat credit in respect of GTA service which is used for transportation of motor cycles from factory to show room which were sold as suc .....

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(Appeals) has conclusively held that in the absence of ingredients such as fraud, collusion, suppression of fact etc. with intent to evade payment of duty, the penalty is not imposable under Section 78. Considering this finding which equally applicable in case of invocation of extended period in terms of proviso to Section 73, the demand is not sustainable on the ground of time bar also. Therefore, the impugned order is not sustainable on merit as well as on limitation and the same is modified. .....

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lding the Order-in-Original No. P-I/ADC/ST/123/2013 dt. 27.12.2013 upheld the disallowance of Cenvat Credit of ₹ 8,74,955/- and recovery of interest under Section 75 of the Act. However set aside the penalty imposed under Section 78 of the Finance Act read with Rule 15 (3) of Cenvat Credit Rules. 2. The fact of the case is that the appellant is engaged in providing the services namely Authorized Service Station, Business Auxiliary Services and Servicing of Motor Vehicles. They are also eng .....

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tion 75. However the penalty under Section 78 was waived and the penalty imposed under Section 77 was upheld. Aggrieved by the impugned order, the appellant is before me. 3. Shri M.P. Joshi, Ld. Counsel for the appellant submits that the proportionate Cenvat credit attributed to the trading of passenger car was disallowed on the ground that the trading is exempted service. He submits that explanation under Rule 2(e) of Cenvat Credit Rules, 2004 whereunder the exempted service is defined includin .....

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f Motors 2010 (18) STR 64 (Tri. Bang.) which has been upheld by the Hon ble Andhra Pradesh High Court as reported in 2015 (38) STR J53 (A.P.). He submits that the facts of the above cases are identical to the facts in the present case, therefore the ratio of these decisions are applicable in the present case. He further submits that the entire demand is for the period 2008-09 to 2010-11, however the show cause was issued on 5.4.2013 i.e. after more than two years. He submits that Ld. Commissione .....

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hand, Shri V. Kaushal Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that the trading activity, even though specified as exempted service w.e.f. 1.4.2011, but even prior to 1.4.2011 the facts remains that the trading activity is not taxable. Therefore no input credit can be allowed in respect of the service commonly used for providing taxable service as well as trading activity. He placed reliance on the following j .....

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ame time the appellant is engaged in the trading activity of the cars on which no service tax is paid. The charge of the Revenue is that they are availing Cenvat Credit in respect of common services which are used for taxable services as well as for trading activity. I find that the very identical issue has been considered by this Tribunal in the case of Badrika Motors Pvt. Ltd. (supra) and Shariff Motors (supra). In the case of Badrika Motors Pvt. Ltd. (supra) the Cenvat credit was denied on th .....

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to show room which were sold as such and credit was utilized for payment of service tax under authorized service station. The Division Bench has allowed the credit on GTA service. This decision has been upheld by the Honble Andhra Pradesh High Court. The operative order portion is reproduced below: The Andhra Pradesh High Court Bench comprising Hon ble Mr. Chief Justice Kalyan Jyoti Sengupta and Hon ble Mr. Justice Sanjay Kumar on 19-12-2013 dismissed the Central Excise Appeal No. 91 of 2010 f .....

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suggested question of law : Whether CESTAT is correct in holding that the GTA service utilized by the assessee as recipient, is input service for providing the output service i.e., authorized service station ? The aforesaid question amply suggests that there is no element of law involved on the factual aspect. The learned Tribunal has dealt with this aspect in the manner as follows : In our view, unless the vehicles are received and sold, there would not be any servicing of the same. Moreover, t .....

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l facts are involved the appellant is not required to reverse the Cenvat Credit attributed to the trading activity of passenger cars. As regard the judgments relied upon by the Revenue in the case of Mercedes Benz India Pvt. Ltd. (supra). I find that this matter was taken to the Hon ble Bombay High Court when the matter was remanded back to the Tribunal therefore the ratio of the judgment of the Tribunal cannot be applied. As regards Synise Technologies Ltd. (Supra), I find that it is a single m .....

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ai), I find that this decision is given by the Division Bench of this Tribunal where as the Division Bench decision in the case of Shariff Motors (supra) has been considered by the Honble High Court and upheld the same. In this position the Mercedes Benz (supra) decision of this Tribunal stands distinguished. As regard limitation, I find that the Ld. Commissioner (Appeals) while dropping the penalty under Section 78 given the following finding: From the decisions of various higher appellate aut .....

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