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TMI Blog2010 (5) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the cenvat credit. Similarly in the ST-3 returns filed by the appellants for the period from April 2004 to September 2004, the amount of service tax payable was Rs.25,256/- + 107/- and the appellants adjusted the said amount against the cenvat credit. As per the cenvat credit return filed along with the ST-3 returns, it was observed that the appellants were availing the credit on advertising, security, courier, telephone and banking services. These services were not entirely used in providing Maintenance and Repair services but also used in trading activity. Credit of input services, which were entirely used in trading activity, was not available to the appellants for payment of service tax. The total service tax payable for the half ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not at all a service. According to Rule 6(2) of Cenvat Credit Rules, the appellant is required to maintain separate account only in respect of exempted service and dutiable service. Since trading activity cannot be considered a service at all, the question of maintenance of separate accounts does not arise. Further, he also submits that services such as advertisement, security, courier, telephone, banking and professional charges are used commonly for trading activity as well as maintenance and repair, commissioning and installation services. It is not correct to say that these services are not required or have not been utilized for trading activity also. He submits that entire credit has been disallowed without taking this aspect into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Credit Rules and Service Tax Credit Rules would be applicable. Rule 6(2) of Cenvat Credit Rules is reproduced below: "Where a manufacturer or provider of output service avails of CENVAT CREDIT in respect of any inputs or input services, [***], and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of both Central Excise Act as well as Finance Act, 1994. Therefore, we have a situation where an assessee would not be eligible to take input service tax credit on an output which is neither a service nor excisable goods and at the same time there is no provision to cover situations where an assessee is providing a taxable service and is undertaking another activity which is neither a service nor manufacture. In such a situation the only correct legal position appears to be that it is for the appellant to choose and segregate the quantum of input service attributable to trading activity and exclude the same from the records maintained for availment of credit. Naturally this cannot be done in advance since it may not be possible to fore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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