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TMI Blog2023 (11) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... d not been reversed in the manner prescribed in rule 6 of CENVAT Credit Rules, 2004. 2. The appellant, a manufacturer of 'ball bearings', had also procured similar products for sale and, as recipient of 'taxable services', had availed credit of tax paid thereon under rule 3 of CENVAT Credit Rules, 2004 but, taking note of the exclusion of certain activities for eligibility, claimed that they had reversed a portion thereof notwithstanding which they were served with show cause notice for recovery of Rs. 76,17,595/- pertaining to the period from April 2009 to July 2011 which was confirmed by order [order-in-original no. PUN-EXCUS-001-COM-021-13-14 dated 19th September 2013] of Commissioner of Central Excise, Pune - I Commissionerate, along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of requirements of rule 6(3) of CENVAT Credit Rules, 2004 precluded recovery of differential determined in the impugned order. It was pointed out that, by amendment of rule 6 of CENVAT Credit Rules, 2004, Explanation I was incorporated vide notification no. 28/2012-CE (NT) dated 20th June 2012 to provide that '(c) in case of trading, shall be the difference between the sale price and the cost of goods sold (determined as per the generally accepted accounting principles without including the expenses incurred towards their purchase) or ten per cent of the cost of goods sold, whichever is more.' and it was contended by him that this too should, equitably, have retrospective effect. 4. Learned Authorised Representative submitted that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be done in advance since it may not be possible to forecast what would be the quantum of trading activity and other activity which is liable to service tax. The only obvious solution which would be legally correct appears to be to ensure that once in a quarter or once in a six months, the quantum of input service tax credit attributed to trading activities according to standard accounting principles is deducted and the balance only availed for the purpose of payment of service tax of output service. This proposition is not against the law in view of the fact that there are several decisions of various High Courts and also of the Tribunal wherein a view has been taken that subsequent reversal of credit amounts to non-availment of cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices' were deployed in common on the activity of manufacturing of, as well as 'trading' in, ball bearings. 8. The sole issue surviving for resolution thereafter is the mechanism to be adopted for neutralization owing to operation of rule 6(2) of CENVAT Credit Rules, 2004 which makes it clear that such services, as are deployed for production of exempted goods or rendering of exempted services, cannot continue to be retained in the CENVAT credit account. Rule 6(2) of CENVAT Credit Rules, 2004 provides for segregation of services, procured in common, upon being utilized for the two different streams of activity; however, owing to the nature of 'services', mapping of boundaries and patrolling of border, metaphorically speaking, is rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trading, the value of such goods are not absorbed in the activity of trading. Consequently, value of trading must necessarily be limited to the difference between the selling price and the purchase price of the traded goods. The appellant claims to have adopted such as the basis for computation. 11. The impugned order has not taken this aspect into consideration and, therefore, computation thereof has not been subjected to verification. In these circumstances, our finding supra, holding that the value adopted for the purpose of reversal shall be limited to the difference between the purchase price and selling price of traded goods and the proportion thereof to the proceeds of sale of manufactured goods as the basis for apportioning the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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