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2024 (5) TMI 3 - AT - Central ExciseReversal of CENVAT credit - Investment in shares - Nature of activity - Sale or service - Exempt service or not - Press mud is waste product like Bagasse or not - exigibility of goods/service tax - burden on Revenue to prove the case. Taxability - Press mud is waste product like Bagasse or not - exigibility of goods/service tax - burden on Revenue to prove the case - HELD THAT - The impugned demand cannot sustain since Press mud is no different from Bagasse which is also a waste product which is also a result of the manufacturing process of a different product and consequently the impugned demand cannot sustain - Hon ble Allahabad High court in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE 2019 (5) TMI 972 - ALLAHABAD HIGH COURT has held that Rule 6 of the Cenvat Credit Rules would have no application for reversal of Cenvat Credit in relation to Bagasse. - demand set aside. Reversal of CENVAT credit - Investment in shares - Exempt service or not - HELD THAT - The appellant had invested in shares/securities that were giving dividend income but however we fail to understand as to what was service element involved in such investment. The revenue has only fastened the liability on surmises and without there being any positive findings in this regard. It was for the revenue to prove that investment itself was a service in order to demand service tax. Rather the first appellant authority himself has at paragraph No.14.01 observed that such investment would be an activity outside the definition of service being a mere transaction in money but however has concluded in the same para that activity of investment in shares and derivative trade satisfy the definition exempted services under Cenvat Credit Rules 2004. There are no logic in treating the mere investment as an exempted service because the revenue has not specifically alleged if there is any service in the first place. Secondly up to 01.07.2012 even if it is assumed to be an exempted service then the same was not taxable. With the introduction of negative list w.e.f. 01.07.2012 S. 66B of the Finance Act empowers the levy of service tax on the value of all services other than those in the negative list which are provided or agreed to be provided by one person to another. Exempted service although exempted nevertheless should satisfy the ingredients of service in the first place. In this case by making an investment the appellant does not do any activity for another for a consideration. Further specific exclusion from the definition of service is given to transactions involving transfer of title in goods or immovable property by the way of sale since trading in security involves transfer of title in goods the activity of trading in securities cannot therefore be said to be a service - the authorities below have grossly erred in demanding the tax on the investment made by treating the same as service although exempted and consequently the impugned order is set aside. Appeal allowed.
Issues Involved:
1. Whether the investment in shares is an exempted service, requiring the reversal of credit? 2. Whether Press mud is a waste product like Bagasse? Summary: Issue 1: Investment in Shares as Exempted Service The tribunal examined whether investment in shares and securities, which yields dividend income, qualifies as an exempted service necessitating the reversal of CENVAT credit. The first appellate authority had remanded the issue to the original authority to verify if the appellant was involved in trading activities beyond their own concern. The tribunal concluded that mere investment in shares does not constitute a service, as it lacks the "service" element required for taxability and is a mere transaction in money. Consequently, the authorities below erred in treating the investment as a service and demanding tax on it. The tribunal set aside the impugned order, holding that investment in shares/security does not amount to trading in securities, and inputs/input services cannot be said to be used in or in relation to trading in securities. Issue 2: Press Mud as Waste Product The tribunal considered whether Press mud, like Bagasse, is a waste product and thus not subject to excise duty. Citing the Supreme Court's decision in DSCL Sugar Limited and the Allahabad High Court's ruling in Balrampur Chini Mills, the tribunal noted that Bagasse is not an excisable product as it is an agricultural waste. The same logic applies to Press mud, which is also a waste product resulting from the manufacturing process. Therefore, Rule 6 of the CENVAT Credit Rules, which pertains to excisable goods, does not apply to Press mud. The tribunal held that the impugned demand for reversal of CENVAT credit on Press mud cannot sustain. Conclusion: The tribunal allowed the appeal with consequential benefits, declaring that: 1. Investment in shares/security does not per se tantamount to trading in securities. 2. Inputs/input services cannot be said to be used in or in relation to trading in securities. 3. Trading in securities is not a service, let alone an exempted service. Result: The appeal was allowed with consequential benefits as per law.
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