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TMI Blog2023 (11) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... riod prior to specific exclusion of trading activity is concerned. From the very beginning, eligibility for availment of CENVAT credit of tax paid on input service was set out to exclude such as used for undertaking exempt service which incorporates both taxable service subject to exemption and services on which no tax is leviable thereon. Though, trading came to be acknowledged within the framework of CENVAT Credit Rules, 2004 specifically with effect from April 2011, the Explanation incorporating such specifies had to be clarificatory in consequence; such services as are beyond the purview of Finance Act, 1994 such as has been held by the Tribunal, in M/S. ORION APPLIANCES LTD. VERSUS CST AHMEDABAD [ 2010 (5) TMI 85 - CESTAT, AHMEDABAD] , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 6(3) of CENVAT Credit Rules, 2004 had not been complied with by assessee, we see no reason for further proceedings except insofar as notice under rule 14 of CENVAT Credit Rules, 2004 and penalty under rule 15 CENVAT Credit Rules, 2004 is to be confined to non-adherence to the terms as set out. Appeal disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 23,34,816/- for 2009-10 and ₹ 42,81,086/- for 2010-11 for the period thereafter. It was held that the appellant had failed to comply with rule 3A of CENVAT Credit Rules, 2004 and, therefore, value of traded goods was to be adopted for the purpose. 3. According to Learned Counsel for the appellant, 'trading activity' had not been incorporated as 'exempted service' in rule 2(e) of CENVAT Credit Rules, 2004 till 2011 and, therefore, there was no requirement for them to exclude any service used in common from eligibility for credit. It was contended that the amendment carried out, by introduction of Explanation in rule 2(e) of CENVAT Credit Rules, 2004, cannot be deemed as having retrospective effect to cover the period of the dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re an assessee is undertaking activities which cannot be called a service or which cannot be called manufacture, that activity goes out of the purview of both Central Excise Act as well as Finance Act, 1994. Therefore, we have a situation where an assessee would not be eligible to take input Service tax credit on an output which is neither a service nor excisable goods and at the same time there is no provision to cover situations where an assessee is providing a taxable service and is undertaking another activity which is neither a service nor manufacture. In such a situation the only correct legal position appears to be that it is for the appellant to choose and segregate the quantum of input service attributable to trading activity and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking 'exempt service' - which incorporates both 'taxable service' subject to exemption and services on which no tax is leviable thereon. Though, 'trading' came to be acknowledged within the framework of CENVAT Credit Rules, 2004 specifically with effect from April 2011, the Explanation incorporating such specifies had to be clarificatory in consequence; such services as are beyond the purview of Finance Act, 1994 such as has been held by the Tribunal, in re Orion Appliances Ltd, lies within exclusive powers of the State Government and is in conformity by the second limb of the definition. Accordingly, trading activity was always to be treated as having been exempt service within the meaning of rule 2(e) CENVAT Credit Rules, 2004. Conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as the factors for such delineation, it is the claim of the appellant that adoption of value of traded goods would distort the principle underlying CENVAT credit scheme. 9. We find that the service value of trading has been incorporated in rule 6 of CENVAT Credit Rules, 2004 with effect from 1st June 2012 and we find no reason for not according it retrospective application, especially as several decisions have held the specifying of 'trading' exempted service to be clarificatory. 10. Furthermore, the composition of cost of manufactured goods includes not only the value addition at the factory of the manufacturer but also of value of manufactured inputs used therein. Such construct of manufacturing cannot be presumed insofar as procurem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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