2016 (3) TMI 809 - AT - Service Tax

Availment of Cenvat credit - Tax paid on services used in common for output services and trading - Held that - in view of the decision of Tribunal in the case of Mercedes Benz India Pvt Ltd v Commissioner of Central Excise Pune - I 2014 (4) TMI 12 - CESTAT MUMBAI , the credit that may be availed of the tax paid on services used in common for output services and trading during the relevant period is to be so apportioned and appropriate reversals effected. Therefore, as the turnover has been the basis for apportionment, there is no reason to interfere with the Commissioner (Appeals) order. - Decided against the appellant

Summary

Issues:
1. Dispute over availing CENVAT Credit on 'inputs' and 'input services' used for trading activity.
2. Interpretation of whether 'trading' qualifies as an 'exempted service' under CENVAT Credit Rules, 2004.
3. Applicability and prospective nature of the amendment deeming 'trading' as an 'exempted service'.
4. Apportionment of credit for services used in 'output service' and 'trading' activities.

Analysis:
1. The appellant contested the denial of CENVAT Credit, arguing that 'trading' is not covered under 'exempted goods' or 'exempted service,' challenging the computation of ineligible credit and reversal of CENVAT Credit. Various decisions were cited to support their claim.
2. The main contention was whether 'trading' constitutes an 'exempted service,' especially concerning services used for 'output service' and 'trading.' The appellant argued that 'trading' was not a service and should not be subject to apportionment of credit.
3. The insertion of 'trading' as an 'exempted service' in April 2011 was debated for its prospective application, with reliance on past decisions regarding the retrospective effect of amendments in CENVAT Credit Rules.
4. The Tribunal concluded that 'trading' was not a service and the amendment deeming it as an 'exempted service' was prospective. The apportionment of credit for services used in 'output service' and 'trading' was upheld based on turnover ratios, leading to the rejection of the appeal.

Conclusion:
The Tribunal upheld the impugned order, emphasizing the need to apportion credit for services used in 'output service' and 'trading' activities. The decision highlighted the non-retrospective nature of the amendment deeming 'trading' as an 'exempted service,' affirming the validity of the order-in-appeal. The appeal was consequently rejected, and the judgment was pronounced on 19/02/2016.