2018 (3) TMI 7 - AT - Central Excise

CENVAT credit - input services - Revenue was of the view that since the said input services are being used by the appellant for the sale of their own manufactured goods as well as under the trading activities, they are not entitled to the Cenvat Credit relatable to the trading activities - Held that - Tribunal in the case of Tricity Auto Vs. CCE, Chandigarh-II 2016 (4) TMI 1172 - CESTAT CHANDIGARH , where it was held that common input services used in trading as also manufacturing activities are not required to reverse the credit relatable to the trading activities prior to 01.04.2011 - Inasmuch as the period involved in the present appeal is prior to 01.04.2011, demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of Cenvat Credit on input services for manufacturing and trading activities.
2. Quantum of reversal of credit based on trading activities.
3. Applicability of exempted services on trading activities prior to 01.04.2011.

Analysis:
1. The appellant, engaged in manufacturing Glazed Ceramics Tiles & Vitrified Tiles, availed Cenvat Credit on input services for both manufacturing and trading activities. The Revenue contended that credit related to trading activities was not permissible. Proceedings were initiated resulting in demand confirmation. The appellant argued for apportioning credit based on actual trading activities rather than a ratio of total sales. The Commissioner (Appeals) upheld most of the reversal but accepted the appellant's stance on specific services. Both parties appealed.

2. The appellant argued that trading activities were not considered exempted services before 01.04.2011, thus Cenvat Credit should not be denied. Reference was made to various Tribunal decisions. The Tribunal reviewed precedent cases like Tricity Auto, Kundan Cars Pvt. Ltd., Marudhan Motors, and Franke Faber India Ltd., which held that credit related to trading activities need not be reversed pre-01.04.2011. Following this precedent, the impugned orders were set aside, allowing the appellant's appeal and rejecting the Revenue's appeal.

This judgment clarifies the availment of Cenvat Credit for input services used in both manufacturing and trading activities, emphasizing the need for specific apportionment of credit based on actual activities. It also highlights the non-applicability of exempted services to trading activities pre-01.04.2011, providing a clear legal precedent for similar cases.