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TMI Blog2017 (3) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... vices, which are rendered to the suppliers of the goods from foreign countries - The activities of export of service is not to be taxed. Reversal of CENVAT credit - credit availed on common input services, attributable to their trading activities - Rule 6(3) of Cenvat Credit Rules, 2004 - Held that: - input service credit available is only when output service is taxable. If there is no output service, no credit can be taken - Since trading, during the material time, is not even considered as an “exempted service”, it necessarily follows that no credit on input services used for trading activities can be availed at all. If there are common input services, it necessarily follows that, in the absence of separate accounts, the services attr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their trading activities. The Revenue held a view that in terms of Rule 6(3) of Cenvat Credit Rules, 2004, the respondent should have reversed proportionate credit, as they have not maintained separate accounts of credit for availing common input services. 3. Proceedings initiated against the respondent were concluded by the impugned order. The Commissioner dropped the demand against the respondent. The Revenue is aggrieved by this order and filed this appeal. 4. In the grounds of appeal, it is mentioned that the respondent is liable to pay service tax on the Commission Income received from their foreign associates. The respondent have promoted the products of the foreign manufacturer in India. The performance of service is in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit. He relied on the certain decided cases to hold that for the period upto 31.03.2011, trading activities cannot be considered as an exempted service attracting the provisions of Rule 6(3) of CCR, 2004. 7. We have heard both the sides and perused the appeal records. 8. On the first issue, we find that the services rendered by the respondent were in relation to procuring orders and promoting products, of foreign suppliers. Admittedly, the said services fall under the category of BAS . However, it is a well settled legal position that the nature of service rendered by the respondent is consumed by the foreign supplier of goods. The benefit is directly accruing to such foreign entities. The Tribunal held that in respect of Busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice . Going by this fact, it is clear that no credit is available on any input service attributable to trading during the material time. When no such credit is eligible, the respondent cannot avail the benefit of cenvat credit scheme. Having availed the credit on common input services, without maintaining separate accounts, it is not open to the respondent to claim that there is no need for reversal of proportionate credit attributable to their activity of trading. If trading is not to be considered as an exempted service (or service at all) then the cenvat credit scheme itself is not available to a trader. The respondent, being a trader as well as output service provider, has availed credit on common input services. Their failure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If there are common input services, it necessarily follows that, in the absence of separate accounts, the services attributable to taxable output service can only be held eligible to the respondent. In view of this legal position, we find that the respondent is liable to reverse the credit attributable to the trading activities. Considering the issue is of legal interpretation and there are different decisions on the matter, we find that the demand is to be restricted to normal period and no penalty is imposable on the respondent. 10. In view of the above discussion, we hold that the Revenue s appeal will succeed to an extent of reversal of cenvat credit for normal period along with applicable interest. The appeal is allowed partly to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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