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TMI Blog2018 (12) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order - appeal allowed. - APPEAL NO: E/724/2010 - A/88162/2018 - Dated:- 20-12-2018 - Shri C J Mathew, Member (Technical) And Shri Ajay Sharma, Member (Judicial) Ms Padmavati Patil, Advocate for appellant Shri S Hasija, Superintendent (AR) for respondent ORDER Per: C J Mathew Appellant, M/s MIRC Electronics Limited, a manufacturer of various branded electronic goods, also trades in similar articles; however, for the purposes of the present dispute, the admitted trading in microwave ovens and DVD players would suffice to be taken on record. The appellant had, between 2004-05 and 2007-08, availed CENVAT credit of tax paid on services used in common for both manufacturing and trading activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of invoking section 11AC of Central Excise Act, 1944 in the circumstances of discharge of the liability, along with interest, before the issue of show cause notice. 4. According to Learned Counsel for appellant, it was only by an amendment, effective from 1st April 2011, that trading was included in the definition of exempted service and that, till then, it was not even considered to be a service let alone acknowledged as exempt. Contending that it was not possible, at the time of procurement, to isolate the portion of service utilized toward trading, and the system relied upon could, conceivably, have blemishes, the ingredients precedent for invoking the penal provisions in Central Excise Act, 1944 are claimed to be absent for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, the ineligible credit had been reversed, along with payment of interest, by the appellant well before the issue of show cause notice. In re Ruchika Global Interlinks , the Hon ble High Court of Madras was dealing with the claim of the appellant against disproportionate attribution of taxes on input services used for activities on which no tax was, admittedly, payable and, in that context, it was held that, even in the absence of Explanation, credit of tax paid on input services used in relation to activities that were not taxable should not have been claimed. Such a situation does not obtain in the present dispute where the wrong availment is claimed to have had its genesis in human interface with the SAP system. As the incorrect av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices used for exempted services, including trading, to be entitled to CENVAT credit. That is an admitted position on the part of the appellant here. 7. In view of the consistent stand of the Tribunal on the test of evidence for pre-supposing intent to evade duty, the circumstances pertaining to impugned availment of credit of tax paid on input services used for exempted activities, such as trading, in the various decisions cited by Learned Counsel and the specific circumstances in which the High Courts and Hon ble Supreme Court has enforced the penal provisions, we set aside the penalty imposed in the impugned order. The appeal is allowed to that limited extent. (Pronounced in Court on 20/12/2018) - - TaxTMI - TMITax - Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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