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TMI Blog2016 (9) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... the audit team that the appellants were procuring acetic acid through import and they were availing Cenvat credit of CVD paid on said inputs and also Cenvat credit of Service Tax paid on inward transportation of said inputs. Initially, audit team considered that such goods were procured only for the purpose of trading. The respondent through their letter dated 16-9-2011 informed the authorities that acetic acid was their input which was used in manufacture of final product and that input was also sold by them and while clearing said input as such they reversed Cenvat credit as required by Rule 3(5) of Cenvat Credit Rules 2004 and that they did not reverse Cenvat credit of Service Tax paid on inward transportation. There was exchange of cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain quoted in his finding and after going through various pronouncements the original authority has confirmed the demand raised in the said show cause notice and imposed equal penalty. 3. Aggrieved by said Order-in-Original dated 28-02-2014 respondent filed appeal before Commissioner (Appeals), Meerut-ll. Ld. Commissioner (Appeals), Meerut-ll as held that the department has failed to established that the said inputs were only procured for trading purpose and that they were used in the manufacture of final products also by taking into consideration the information that was available in the order-in-original. Further he held that the inputs which were cleared as such were covered by Rules 3 (5) of said Rules and only reversal of credit avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r capital goods and outward transportation upto the place of removal; Thus, the goods, which have been brought into factory for trading activity, do not fall in the ambit of the definition. Thus, the services involved cannot be considered as input service as these had neither been used by a provider of taxable service for providing an output service, nor used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products, Therefore, the cenvat credit taken on the services availed in respect of such goods is not admissible. The Hon'ble CESTAT, in the case of Orion Appliances Ltd. V/s Commissioner of Service Tax, Ahemadabad 2010(19) S.T.R. 205(Tri-Ahmd.), has held that cenvat credit of inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11A and Section 11AC use the same expressions: "....by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...." In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11 AC would also get attracted. The converse of this, equally true, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-in-Original the percentage of Acetic Acid which was cleared as such by them which was about 18% to 32% of their import and balance was consumed by them. Though the contention of the Revenue was that those goods were imported only for the purpose of trading which is not substantiated. He has further, brought to the notice of this Tribunal a latter F.No.96/85/2015-CX-I,dated 07-12-2015 issued by Central Board of Excise & Customs, New Delhi wherein the decisions regarding issues of assessment taken in Tariff Conference held on 28th & 29th October 2015 were circulated for clarity of understanding and uniformity of practice in assessment. Point B. 26 of the said letter is reproduced below: B.26 - Meerut zone - CENVAT Credit - Reversal of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are received in the factory. Thus on receipt of inputs and capital goods, the associated input services have to be considered as consumed within the factory and become a cost to the business. Demand for reversal of the input services credit, when such input services cannot be reused, unlike inputs and capital goods which are available for reuse would not be fair to the trade. Therefore, the conference concluded that the present rule represents the correct provision in accordance with the principles of input tax credit. Rule 3(5) of the Cenvat Credit Rules, 2004, does not need any amendment. Audit para may be replied accordingly. 7. He also relied on various pronouncements. 8. I have taken into consideration rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X
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