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TMI Blog2013 (11) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... ards, insurance, advertising, security, business promotion, financial expenses, recruitment expenses, staff training expenses, courier service, repairs and maintenance service, legal and professional fees, etc. and these services were used both for the manufacturing activities as also for the trading activity. 2.1 On scrutiny of the records it was found that the appellant had not maintained any separate accounts for the services used in respect of manufacturing activity and the trading activity and, therefore, a letter was issued to the appellant asking them how they satisfied the provisions of CENVAT Credit Rules, 2004 (CCR in short). The appellant replied that even though they did not maintain separate account at the end of the month, total service tax credit available for the said month was bifurcated in the ratio of turn-over for the manufacturing sales and trading sales and service tax credit was taken only of the service tax relating to the manufacturing sales turn-over. The department was of the view that in the absence of any maintenance of accounts for the dutiable goods and services, and exempted products and services, the appellant is liable to pay a sum @10% (up to 06/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowave Oven and & DVDs and the credit on traded goods for the period 2004-05 to 2007-08 were arrived at Rs.1,02,91,108/-." Thereafter, a show cause notice was issued to the appellant demanding recovery of the above amount vide notice dated 28/10/2009 and, thereafter, vide order dated 29/01/2010 the amount of Rs.1,02,91,108/- was confirmed and the amount paid by the appellant was appropriated along with interest thereon. A penalty of equivalent amount was also imposed under Section 11AC ibid read with Rule 15 of CCR, 2004. Against the said order of the adjudicating authority, the appellant had filed an appeal before this Tribunal and the tribunal had granted stay vide order No. S/369/11/EB/C-II dated 18/04/2011. Thus, the fact that the appellant was taking service tax credit on proportionate basis on the manufacturing sales turn-over was known to the department as early as in 2008 and the department had also approved the same. Therefore, the show cause notice dated 07/10/2011 issued in the present case, invoking the extended period of time is unsustainable in law. 3.1 The learned counsel also submits that as per Rule 6(1) of the CCR, 2004 CENVAT credit shall not be allowed on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r method of determination and payment of amount payable under sub-rule (3) and as per this, if common services are used for both the taxable as well as exempted services, then the credit attributable to the exempted services should be computed on the basis of a formula and if the liability is worked out as per this formula, it can be seen that they will required to pay an amount of Rs.16 lakhs and not Rs.297 crore as alleged in the show cause notice. If benefit of services as specified in sub-rule (5) of Rule 6 is given, the appellant would not be required to pay any amount at all towards the input services used in the manufacture of trading activity. 3.3 The appellant relies on the decision of this Tribunal in the case of Orion Appliances Ltd. vs. Commissioner of Service Tax, Ahmedabad 2010 (19) STR 205 wherein a similar question arose and this Tribunal held as follows: "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 anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority for fresh consideration. 5. We have carefully considered the submissions made by both the sides. 5.1 Both the show cause notice as also the impugned order invokes the powers of Section 11A of the Central Excise Act, 1944 read with Explanation III to Rule 6(3A) and Rule 14 of the CCR, 2004. However, in the show cause notice, in para 8 thereof it has been alleged as follows: "8. Accordingly, it appears from the foregoing facts that it is clear that the assessee had not maintained separate accounts for receipt, consumption and Inventory of "input service" meant for use in manufacture of dutiable and exempted goods and take Cenvat credit only on that quantity of input service which was intended for use in manufacture of dutiable final products or in providing output service on which service tax was payable as envisaged in Rule 6(2) of the Cenvat Credit Rules, 2004." 5.2 The goods which the appellant had traded are imported goods. As per the definition of exempted goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to 'Nil' rate of duty and goods in respect of which the benefit of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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