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TMI Blog2018 (7) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... as trading of goods are concerned - denial of credit justified. Another contention of appellant is that the total amount of Cenvat credit taken on common input services from April 2008 to December 2012 comes to an amount of ₹ 6,45,782/- only while a demand has been raised for an amount of ₹ 2,96,86,162/- - Held that:- The statute does not have any intention under Rule 6 (3) of the Cenvat Credit Rules, 2004 of earning any profit out of wrongly availed credit by an assessee - as per the existing law the Department is right in recovering back the input service credits which are only attributable to the exempted services including ‘trading activity’. Since, the amount of such common input credit is already available, the Department should recover back the input service credits which have gone only into exempted services. Since the above-mentioned amount of ₹ 6,45,782/- is attributable to both exempted as well as taxable services, therefore, this order-in-original is remanded back to re-adjudicate the matter only with regard to the apportionment of above- mentioned common input service credit between exempted and taxable service and confirm the amount which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d pertains to April 2008 to December 2012; and therefore changes in the rules cannot be given retrospective effect ; (ii) that the total amount of Cenvat credit taken on common input services from April 2008 to December 2012 comes to an amount of ₹ 6,45,782/- only while a demand has been raised for an amount of ₹ 2,96,86,162/-. 4. Heard both the sides and perused the record of the appeal. 5. With regard to the point (i) above, the learned Advocate has relied upon the judgment of Orion Appliances Ltd. vs. CST, Ahmedabad 2010 (19) S.T.R. 205 (Tri. Ahmd.) as well as Faber Heatkraft Industries Ltd. 2008 (232) E.L.T. 182 etc. We are of the view that so far as the availability of Cenvat credit on the input services going into the use for trading of goods is concerned, the law remains settled in this regard wherein it has been held in various pronouncement of this Tribunal that the Cenvat credit on input services going into the trading of goods is not available as per the provisions of Cenvat Credit Rules, 2004. In this regard the relevant extract of the judgment in the case of M/s Mercedes Benz India Pvt. Ltd. vs. CCE, Pune I 2014 (36) S.T.R. 704 (Tri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vider of a taxable service for providing output service. The second part provides for use by a manufacturer in or in relation to the manufacture of final products. Further, the said definition relating to manufacture not only relates to the services which are used in the manufacturing operations but also includes services used in relation to setting up, modernization, renovation or repairs of a factory, advertisement or sales promotion, market research, storage up to the place of removal, etc. The definition further includes activities relating to business such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security. Thus we observe that second part of the definition includes services which are required for setting up of the factory or marketing of the goods. For example, advertisement or sales promotion or market research or storage up to the place of removal, etc., are activities which may not be directly used in the manufacture of the goods but are required for sale of manufactured goods. Further, there are certain services which are not directly related to the manufacture or ulti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not qualify to be a input service under Rule 2(l) of the 2004 Rules. In view of the above judgment, he was of the opinion that a manufacturer claiming the benefit of Cenvat credit on any service under Rule 2(l) on the premise that the service is covered by the above expression should establish an integral connection between the activity/service and the business of manufacturing the final product. 31.1 I find that the decision in the case of Coca Cola analyses the definition of input services in 5 limbs and holds that each limb of the definition of input service can be considered as providing an independent benefit or concession or exemption. One of the limbs considered related to services used in relation to activities relating to business .... . However, the scope of the term activities relating to business was not spelt out in the said decision. 31.2 However, the latter decision of the Hon ble High Court of Bombay, Nagpur Bench in the case of Ultratech Cement Ltd. has dealt with the scope of the said phrase and held as under : 29. The expression activities in relation to business in the definition of input service postulates activities which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with manufactured product (and not to the traded goods). We also note that all services used in business are not included in the definition of input service. This part of the definition reads - activities relating to business such as accounting, auditing, financing, recruitment and .... Thus the services used in activities such as accounting, auditing, financing, recruitment, etc., are only to be allowed. The services under dispute are mainly advertisement, event management, business auxiliary, business support services. None of these services are relating to activities illustrated or enumerated in the definition. On this ground also we do not find any merit in the contention of the appellant assessee that they would be entitled to the credit of common services. We, therefore, hold that the common services are not covered by the definition of activities relating to business . 6. Coming to the second aspect of point no. (i), the learned Advocate has contended that the amendment to Rule 2 (e) of the Cenvat Credit Rules, 2004 cannot be retrospective wherein the definition of exempted goods has been expanded to include the trading of the goods vide Notification No. 3/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case, the expressions in the explanation as inserted by Notification No. 2/2016-C.E. (supra), make it clear that it is for explaining the meaning of clause sales promotion in the context of Rule 2(l) of the Rules, 2004. It is to provide an additional support to the dominant object of the word sales promotion in Rule 2(l) in order to make it meaningful and purposeful. The language of the explanation is consistent with Board Circular to the benefit of the assessee and it would be effective retrospectively. The Hon ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra), in the identical situation, held that if a legislation confers a benefit on some other person or on the public generally, and where to confer such benefit appears to have been the legislature s object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. The relevant portion of the decision in the case of Vatika Township Pvt. Ltd. (supra) is reproduced below :- We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 4,06,785/- plus interest, this is not under dispute. Therefore in our view, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of ₹ 24,71,93,529/- of the total value of the vehicle amounting to. ₹ 494,38,70,577/- sold in the market cannot be demanded. We are also of the view that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. It is also observed that in either of the three options given in sub-rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% will automatically be applied. Therefore we do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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