TMI Blog2018 (9) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... is held to be exempted service prior to 1.4.2011. The appellant cannot blow both hot and cold. Wrong utilization of CENVAT credit - Demand of ₹ 35,91,928/- with interest - Held that:- Since this being only a part of the total credit amount of ₹ 3,22,07,534/-, the demand of which has already been upheld, it would cause double jeopardy, hence demand of ₹ 35,91,928/-, along with interest, will become a unjustifiable demand and therefore set aside. Penalty u/s 78 - Held that:- This issue involves interpretation whether the availment of impugned credits are in order or otherwise - penalties not warranted and is set aside. The impugned order is modified to the extent of setting aside the demand of ₹ 35,91,928/- and the penalty imposed under section78 of the Finance Act, 1994 without disturbing the remaining part of the impugned order except penalty - appeal allowed in part. - Appeal No. ST/302/2011 - Final Order No. 42328 / 2018 - Dated:- 31-8-2018 - Hon ble Ms. Sulekha Beevi C.S., Member ( Judicial ) And Hon ble Shri Madhu Mohan Damodhar, Member ( Technical ) Shri Raghavan Ramabhadran, Advocate for the Appellant Shri A. Cletus, Addl. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied to the paper mills (viii) Cargo contracts (ix) Insurance paid on materials / components lying with sub-contractors (x) Deputation of technical staff to job workers premises to assist / supervise the manufacturing process 2.1 The department was of the view that the credit availed on the above input services is not eligible for the reason that the said input services are not used for providing output services. It was also seen that the credit availed was purely related to trading activity. Since the appellant had not registered as a manufacturer and the input services were not used for providing output services, it appeared that they are not eligible for the credit to the tune of ₹ 2,45,17,446/- relating to the period April 2007 to September 2008. Show cause notice was issued proposing to demand wrongly availed CENVAT credit along with interest and also for imposing penalties. 2.2 During the course of audit, it was also noticed that the appellant availed CENVAT credit on services such as:- (i) Corporate support service (ii) Courier services (iii) Chartered Accountants service (iv) Telephones / mobile phones (v) Rent (vi) Rent-a-cab servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials supplied. Upon completion of the manufacture of Recovery Boilers, the job workers directly clear these to the customer and raise invoices on the appellant for the job charges and the excise duty component. The appellant has availed input service credit on various input services. The department now disputes the credit availed on input services. The sole ground for disallowing CENVAT credit as alleged in the show cause notice is that the entire credit availed by the appellant is attributable to trading activity and is therefore ineligible in terms of Rule 3 of CENVAT Credit Rules, 2004. He submitted that the department has proceeded on the wrong basis that the activity involved is trading. The ordinary meaning of the word trading as given in The Concise Oxford Dictionary 10th Edition gives the meaning of trade as buying and selling of goods and services A business of a particular kind . Similarly, the Black s Law Dictionary 8th Edition defines trade as the business of buying and selling or bartering goods or services . 3.2 Thus, the essential element to call an activity trading is that it should involve buying and selling of goods. In the present case, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng service, cargo contracts and clearing and forwarding charges for imported goods are also input services for procurement of raw materials to be used in the manufacture of Recovery Boilers. He relied upon the judgment of the Hon ble Supreme Court in the case of Ramala Shahkari Chini Mills Vs. Commissioner of Central Excise, Meerut 2016 (334) ELT 3 (SC) to argue that the word includes used in the definition of input service cannot be interpreted in a restrictive manner. 3.4 The ld. counsel relied upon the decision rendered in their own case reported in 2017 (48) STR 261 (Tri. Chennai) wherein on similar set of facts, the input credit disallowed on Chartered Accountancy Service, Courier Agency Service, Manpower Supply Service, Telecom Service, Business Support Service,, Banking and Other Financial Service, Testing and Inspection Service were held to be eligible. 3.5 It is also argued by him that the demand to recover ₹ 35,91,928/- as short-paid duty on the ground that ineligible credit was utilized to pay service tax is a duplication of demand and hence unsustainable. In any case, the appellant has reversed the CENVAT credit of ₹ 3,22,07,534/- without utilizati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds that no credit can be availed on trading is incorrect. 5. Heard both sides. 6. The show cause notice has proposed demand of CENVAT credit of service tax paid on input services availed on CENVAT credit purely related to trading activity amounting to ₹ 2,45,17,446/- for the period from April 2007 to September 2008 and also CENVAT credit on input services availed by the appellant during course of trading activity relating to April 2007 to March 2008 amounting to ₹ 76,90,088/-. The total tax demand proposed is ₹ 3,22,07,534/- with interest thereon. In addition, a sum of ₹ 35,91,928/- has been utilized during the period April 2007 to September 2008 towards discharge of service tax liability which has also been sought to be demanded. 6.1 Ld. counsel has been at pains to convince us that these issues pertains to period prior to 1.4.2011 from which date trading was made a deemed exempted service. That nonetheless, even for the period of dispute the trading activity is required to be considered as an exempted service. To support this, he has relied upon the judgment of the Hon ble High Court of Madras in Ruchika Global Interlinks (supra) to conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to be exempted service even prior to 1.4.2011 and therefore credit availed on trading is admissible. In Ruchika Global, Rule 6 of CENVAT Credit Rules, 2004 was invoked to demand the proportionate credit availed on trading. In the present case, only Rule 3 and Rule 6 has not been invoked. When credit is not admissible under Rule 3, the appellant cannot content that Rule 6 ought to have invoked and that trading is held by the Hon ble High Court to be exempted service prior to 1.4.2011. The appellant cannot blow both hot and cold. 6.3 The ld. counsel has referred to the decision of coordinate Bench of the Tribunal namely L.G. Electronics India Pvt. Ltd. Vs. Commissioner of Central Excise, Noida 2017 (3) GSTL 249 (Tri. All.) in support of his contention. However, we find that the facts there in are not pari materia and hence the ratio therein will not help the appellant. So also in the Single Member decision of the Tribunal in the appellant s own case reported in 2017 (40) STR 261 (Tri. Chennai), there is nothing forthcoming from the facts brought out in the order as to whether the input service was used exclusively for trading. There is no discussion in the said order as to di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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