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TMI Blog2012 (7) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... sion - matter remanded back to Commissioner Cenvat credit - services used for traded goods was admissible - trading activity undertaken by the appellants from their Head Office - Commissioner has stated that the method prescribed under Rule 6(3)(d)(iii) of the Cenvat Credit Rules, 2004 for apportioning common services between dutiable service and exempted services can be taken as a guideline on a rational basis - appellants had paid back the ineligible credit as per work-sheet prepared by them and they contended that the work-sheet was not rejected by the Commissioner – Held that:- Work-sheet submitted by the appellants has not been rejected by the Commissioner and it is open to the Commissioner to call upon the appellants to substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of input services received by them for their factory as well as on input services received for their Head Office and various branches. As per provisions of Rule 2(l) and Rule 2(p) read with 2(h) of the Central Excise Rules, 2004, the Department felt that Cenvat credit can be availed on services which are used for providing any output service or used directly or indirectly, in or in relation to the manufacture of final product. However, the trading activity undertaken by the appellants from their Head Office at Mumbai is neither an output service nor a final product for them and as such they are not entitled to avail Cenvat credit on services used for such trading activity. 2. It was also revealed from the scrutiny of the records that so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 58,83,743/- as BED, plus Rs. 1,10,448/- as Education Cess, plus Rs. 3,73,328/- as AED on raw material used for non excisable goods for the period April, 2004 to August, 2006. was demanded. It was also proposed to impose penalty under Rule 15 of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act and also charging of interest at the appropriate rate under Sec.11AB of the Central Excise Act. The said show-cause notice was adjudicated by the Commissioner of Central Excise, Pune.I vide order dated 5.3.08 in which the amounts demanded in the show-cause notice were confirmed under Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 11A(1) of the of the Central Excise Act, 1944 and the amount alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 to August, 2006. They also contended that they have not at all gained by reversal of 10% as the total amount reversed under Rule 6(3)(b) was Rs. 90,86,941/- whereas the Cenvat Credit attributable to inputs used in the goods containing alcohol was Rs. 63,67,519/-. They contended that very fact that the Cenvat credit equal to 10% of the price was more than attributable credit in the case of the goods containing alcohol shows that there was no intention to take ineligible credit. 5. As regards the trading activity undertaken by the appellant, the ld.Advocate submitted that they were under the bona fide belief that the credit attributable to activities which are neither manufacturing nor service are not contemplated in Rules and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the appeal filed by the appellants needs to be dismissed. 7. After hearing both sides, we find that the first issue involved in the appeal is whether the Cenvat credit available on raw materials and services used for non-excisable goods is admissible to the appellants. Under the Cenvat Credit Rules, input means all goods used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and Cenvat credit can be availed on the duty paid on any input received in the factory of manufacture of the final product. This is an accepted fact that the goods containing alcohol are not final product since the same are not excisable goods under the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show-cause notice. On going through the Order-in-Original, it is found that the Commissioner has stated that the method prescribed under Rule 6(3)(d)(iii) of the Cenvat Credit Rules, 2004 for apportioning common services between dutiable service and exempted services can be taken as a guideline on a rational basis. The appellants are contesting this method of quantification of their liability towards ineligible credit. It is a fact that Rule 6(3)(d)(iii) of the Cenvat Credit Rules was introduced in the Statute Book from 1.4.2007 for apportioning common services between dutiable service and exempted service based on the percentage of sale of finished products. The period involved in the show-cause notice is prior to 1.4.07. The appellants ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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