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TMI Blog2014 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... l excise registrant who has availed the credit and therefore, recovery of wrongly availed credit has to be made from the appellant by the jurisdictional excise authorities. Therefore, we do not find any lack of jurisdiction in the present case. Whether CENVAT Credit can be taken in respect of trading prior to 1-4-2011 - appellant is not an output service provider in respect of all the traded goods and no evidence has been placed before us in this regard. In such a situation, the question of taking credit on input service and its utilization thereof cannot be permitted at all prior to 1-4-2011 - Following decision in case of Mercedes Benz [2014 (4) TMI 12 - CESTAT MUMBAI]. Whether extended period of time could have been invoked for recovery of credit wrongly taken - Knowledge/awareness of the department is not a relevant factor for invoking extended period of time. It is not the appellant's case that they had declared to the department the fact of availing credit attributable to the trading activity either in the statutory returns filed or otherwise. The facts on record prove otherwise. The decision of this Tribunal in the case of Tigrania Metal & Steel Industries [2001 (3) TM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09, 2009-10 and 2010-11 as trading was not a taxable service at all during the said period. The ineligible amount of credit was worked out on the basis of sales turnover of the traded goods and the manufactured goods and apportioning the total credit taken in the same ratio. The said notice was adjudicated vide the impugned order. The adjudicating authority held that w.e.f. 1-4-2011, trading has been deemed as an exempted service and the CENVAT credit rules provided for determination of credit of input service attributable to the exempted service under sub-rule (3A) of rule 6 of CENVAT Credit Rules, 2004 (CCR in short) and based on the formula prescribed therein, he arrived at the quantum of ineligible credit at Rs. 4,24,52,646/- and confirmed the same along with interest and also imposing equivalent amount of penalty. 3. The ld. Counsel for the appellant made the following submissions:- (1) The CENVAT credit was availed on the common inputs services used for the trading activities in their capacity of an output service provider and therefore, the notice for recovery of ineligible service tax credit should have been made under the provisions of Rule 14 of CCR read with se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. It is his contention that when trading itself is not a taxable service prior to 1-4-2011, the question of taking any credit on input services used in trading activities is not permissible. He places reliance on the decision of this Tribunal in the case of Mercedez Benz India Pvt. Ltd. wherein it was held that the Explanation inserted in rule 2(c) of CCR, 2004 clarifying that exempted services includes trading is prospective in nature from 1-4-2011 and prior to the said date, trading is service. Therefore, for the period prior to 1-4-2011, service tax paid on common input services should be apportioned in the same ratio as the turnover of the manufactured and traded goods. In the said decision it was held that the term business' used in the definition of input service is relating to the business of manufacture and not relating to trading activity. Therefore, the denial of credit on input services used in trading activities is correct in law and the impugned demand is sustainable. In as much as the appellant did not disclose the fact of availing input service tax credit attributable to trading, the same amounts to suppression or willful mis-statement of facts and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to deem trading as an exempted service, the question is whether prior to 1-4-2011, trading can be considered as an exempted service. It is not in dispute that trading was not a taxable service prior to 1-4-2011 or after 1-4-2011. This matter was examined at length by this Tribunal in the Mercedez Benz case cited supra. In the said decision, it was held by this tribunal that trading was not a service and therefore, cannot be considered as an exempted service prior to 1-4-2011 and the amended provisions with effect from 1-4-2011 will not have retrospective effect. In the said decision, it was further held that the credit of service tax paid on common input services should be apportioned in the same ratio as the turnover of the manufactured goods and traded goods. It was further held that the input service definition under rule 2(l) of CCR in respect of business activity of the assessee covered only the business of manufacturing and not any other business. The reliance placed by the appellant on the decisions in the case of Badrika Motors (P) Ltd., Shariff Motors, Faber Heatcraft Industries Ltd. and Ghatge Patil Autofarm Machinization does not help for two reasons. These are singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the entire credit attributable to the traded goods, has allowed part of the input service tax credit based on a formula prescribed for the first time with effect from 1-4-2011, will not make any difference at all to the proposition that the appellant was not eligible for the credit ab-initio. 5.5 The next question for consideration is whether extended period of time could have been invoked for recovery of credit wrongly taken. The appellant's contention that the fact of availing of credit by the appellant was known to the department in view of the audit of the records of the appellant cannot be accepted. Knowledge/awareness of the department is not a relevant factor for invoking extended period of time. It is not the appellant's case that they had declared to the department the fact of availing credit attributable to the trading activity either in the statutory returns filed or otherwise. The facts on record prove otherwise. The decision of this Tribunal in the case of Tigrania Metal Steel Industries [2001 (132) ELT 103] and of the hon'ble High Court of Gujarat in the Neminath Fabrics case [(2010) 256 ELT 369 (Guj)] support this view. In view of the above factua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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