2015 (3) TMI 169 - AT - Central Excise

Denial of CENVAT Credit - Trading activity - Held that - Appellant had availed credit of service tax paid on the services which are used for trading activity. As per the Cenvat Credit Rules, the credit of service tax is available to the manufacturer or provider of output service if such services are used for manufacture or providing output service. In the present case, the appellants are undertaking the trading activity which is neither a manufacturing activity not output service. The Tribunal in the case of Mercedes Benz India Pvt. Ltd. (2014 (4) TMI 12 - CESTAT MUMBAI) upheld the confirmation of demand and imposition of penalties which were made on the same grounds. In these circumstances, I find no infirmity in the impugned order - Decided against assesse.

Summary

Issues: Denial of credit for service tax paid on input services used for trading activities.

Analysis:
The appellant, engaged in the manufacture of excisable goods and trading activities, availed credit for service tax paid on input services used for trading. A show cause notice was issued, denying the credit, leading to confirmation of demand, interest, and penalty by the adjudicating authority. The Commissioner (Appeals) upheld the decision. The appellant contended that since trading activity is not an exempted service, the denial of credit was not justified. However, the Cenvat Credit Rules, effective from 1.4.2011, considered trading activity as an exempted service. The Revenue supported the lower authority's findings and cited a Tribunal decision in a similar case.

The Cenvat Credit Rules allow credit for service tax paid on services used for manufacturing or providing output services. In this case, trading activity does not fall under either category. Referring to the Tribunal decision in a similar case, which upheld the confirmation of demand and penalties, the judge found no fault in the impugned order. Consequently, the appeal was dismissed.