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TMI Blog2015 (12) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... reversal of the cenvat credit in respect of the input services like GTA service and transit insurance service availed at the time of receipt of the goods is required in view of the judgment of the Punjab High Court in the case of Punjab Steels (2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT) and also the judgment of the Tribunal in the case of Chitrakoot Steel & Power Pvt. Ltd. reported in [2007 (11) TMI 135 - CESTAT, CHENNAI]. Some cenvated services received may be those which are not connected with receipt of inputs and these services like security, telephone services, sales promotion etc. may have been commonly used for manufacturing as well as trading activity and to the extent some cenvated services were used for trading activities, the cenvat credit would not be admissible. But the amount of cenvat credit to be reversed in proportion to the volume of trading activity has not been quantified by the Department - pre-deposit of ₹ 7 lakhs in addition to the amount already paid would be sufficient for hearing of the appeal - Partial stay granted. - Excise Stay Application No.53661/2014 in Appeal No. E/53251/2014-EX(DB) - Stay Order No. 50381 / 2015 - Dated:- 9-2-2015 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The above show cause notice was adjudicated by the Commissioner, Central Excise vide order-in-original dated 10.03.2014 by which the Commissioner confirmed the demand of ₹ 6,31,61,489/- under the provisions of Rule 6(3) read with Rule 14 and the provisions of Section 11 A(1) of the Central Excise Act, 1944 along with interest thereon under Section 11 AB/11 AA of the Central Excise Act, 1944 and besides this, imposed penalty on the appellant under Rule 15 of the Cenvat Credit Rules read with Section 11 AC of the Central Excise Act, 1944. He ordered appropriation of an amount of ₹ 2,84,404/- already paid by the appellant against the aforesaid demand. In course of proceedings before the Commissioner, it was pleaded on behalf of the appellant that the definition of exempted service given in Rule 2(e) of the Cenvat Credit Rules, 2004 was amended to include trading activities w.e.f. 1.4.2011 and that this amended provision cannot be given retrospective effect and that in any case, the value of the trading services in terms of the Explanation I (C) to Rule 6 (3D) of Cenvat Credit Rules, 2004 would be the difference between the sale price and the cost of the goods sold, (de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been added to sub-rule - (3D) of Rule 6 of the Cenvat Credit Rules, 2004 providing that in case of trading, the value for the purpose of sub-rule (3) and sub-rule (3A) of Rule 6 shall be the difference between the sale price and the cost of the goods sold determined as per generally accepted Accounting Principles without including the expenses incurred towards the sale/purchase or 10% of the cost of the goods sold, whichever is more, that even if for the period prior to 1.4.2011, trading is treated as an exempted service, its value has to be taken as the difference between the sale price and cost of the goods sold, or 10% of the cost, whichever is higher and on this basis, the Appellants liability would not be more than ₹ 40 lakhs, that it is absolutely absurd to take value of the goods sold as the value of the trading services, that when in respect of the inputs sold as such, the appellant have reversed the amount equal to the cenvat credit availed, demanding a further amount @ 8% / 6% of the sale value of the goods is absolutely without any justification and that in view of the above submissions, the impugned order is totally incorrect, that in view of judgment of Honbl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rading activity and since certain common input services have been used, in respect of which cenvat credit had been taken and no separate account and inventory of the services used in the manufacture of dutiable final products and used for trading activities have been maintained, in respect of the trading service, which is an exempted service, the appellant would be required to pay an amount 8% / 6% of the value of the trading service and in this regard, the value of the trading service has been taken as the value of the goods sold and not the difference between the sale price of the goods and the cost of the goods sold or 10% of the cost of the goods sold, whichever is more, as per the provisions of Explanation (I)(c) to Rule 6 (3D), which had been introduced w.e.f. 1.4.2011. 7. In our view, the approach of the department is absurd. The definition of exempted service as given in Rule 2(e) of the Cenvat Credit Rules, 2004 was amended w.e.f. 01.04.2011 to include trading activities by adding an Explanation, that for removal of doubts it is hereby clarified that exempted service includes trading and along with this amendment to Rule 2(e), Explanation (I) (c) to sub-rule (3D) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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