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TMI Blog2024 (3) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... on these lines, therefore cannot be countenanced. The Tribunal in the case of M/S. INGERSOLL-RAND TECHNOLOGIES AND SERVICES PRIVATE LIMITED VERSUS COMMISSIONER, CENTRAL EXCISE, GHAZIABAD [ 2022 (8) TMI 877 - CESTAT ALLAHABAD] have held that for not exercising the option under Rule 6 of the Credit Rules, the option of payment of 5/6% of trading of goods ( exempted service ) cannot be thrust upon the appellant. It is not necessary to examine the contention advanced by the learned counsel for the Appellant regarding invocation of the extended period of limitation. The impugned order cannot be sustained and accordingly the same is set aside - Appeal allowed. - HON BLE MR. P. K. CHOUDHARY , MEMBER ( JUDICIAL ) And HON BLE MR. SANJIV SRIVASTAVA , MEMBER ( TECHNICAL ) Shri Atul Gupta , Advocate Shri Prakhar Shukla , Advocate for the Appellant Shri Sandeep Pandey , Authorised Representative for the Respondent ORDER P. K. CHOUDHARY : The present appeal has been filed by the appellant assailing the Order-In-Original No.05/Commissioner/Noida/2014-15 dated 24.07.2014 passed by Commissioner, Customs, Central Excise Service Tax, Noida. 2. The brief facts of the case are that the Appellant is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 . 5. It is the case of the Appellant that for the period from October 2007 to March 2011, the CENVAT Credit to the tune of Rs. 6,39,745/- was in respect of services utilized exclusively in respect of taxable output service at the authorized service centre. Further Credit of Rs. 4,89,973/- was in respect of services, which were not used exclusively in exempted service and the same falls under Rule 6(5), thus, the whole of the credit was admissible. The learned Adjudicating Authority passed the impugned order dated 24.07.2014 confirming the demand as proposed in the SCN. Hence, the present appeal before the Tribunal. 6. The learned Advocate appearing on behalf of the Appellant submits that since the sale of goods in itself is not an exempted service, there is no bar on the Appellant to avail credit on input services, so long as part of it is also being used for providing taxable services. He vehemently argued that the activity of purchasing cars and selling them on a principal to principal basis cannot be regarded as a service , hence there is no question of the same even coming under the category of exempted services. He further submits that if at all the proportionate credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was increased to 6% with effect from 1-4-2012. 8. It is an admitted fact that the petitioner did not maintain separate accounts of the inputs/input services utilized for providing certain taxable and exempted output services. It also did not choose to opt for one of the procedures stipulated in Rule 6(3) set out supra. The petitioner however availed and utilised Cenvat Credit on such inputs/input services which were common to both taxable and exempted output services and the same amounted to Rs. 17,15,489/-. 9. It may be noted that there is no controversy with regard to the entitlement of the petitioner to avail Cenvat Credit but for this disputed amount of Rs. 17,15,489/- out of the total extent of Rs. 1,41,51,903/-. While so, the second respondent issued show cause notice dated 19-4-2016 to the petitioner proposing to choose the option under the aforestated Rule 6(3)(i) on its behalf and calling upon it to explain as to why it should not be directed to pay an amount of 5%, upto 31-3-2012, and 6%, from 1-4-2012, of the value of the exempted services, aggregating to Rs. 3,52,65,241/-. In its reply dated 16-5-2016, the petitioner contended that it was wholly unreasonable on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondent also confirmed the demand for a sum of Rs. 12,75,645/- being the Cenvat Credit irregularly availed on the strength of debit notes along with a penalty for a like sum. A further penalty of Rs. 10,000/- was also imposed for contravention of the provisions of the Finance Act, 1994. 12. The Assistant Commissioner of Central Tax, Central Excise Service Tax, Secunderabad GST Commissionerate, filed a counter affidavit. Therein, he stated that the writ petition was not maintainable as a statutory appellate remedy was provided to the petitioner. He sought to justify exercise of power by the second respondent under Rule 6(3) of the Cenvat Credit Rules, 2004, on the ground that the petitioner had failed to furnish any information about the option exercised by it. He asserted that the petitioner had availed input tax credit irregularly by furnishing wrong information. This fact was stated to have come to the knowledge of the department only after verification of the petitioner s records. 13. Having considered the issue of maintainability of this writ petition, we are of the opinion that the petitioner cannot be non-suited on the ground of availability of an alternative remedy. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing such a choice on behalf of the petitioner. The Order-in-Original, to the extent that it proceeded on these lines, therefore cannot be countenanced. 16. As regards the issue of debit notes, Sri A. Radha Krishna, Learned Senior Standing Counsel, is not in a position to dispute the case law relied upon by the petitioner in its reply dated 16-5-2016. It is not his case that any of these decisions was overturned or that there is a binding decision of a higher judicial authority to the contrary. He also has no explanation to offer as to why the second respondent did not even deal with the case law cited before him. We therefore hold that disallowance of Cenvat Credit on the ground that the petitioner had availed the same by producing debit notes instead of invoices cannot be accepted. 17. In effect, the Order-in-Original does not withstand judicial scrutiny on both issues and is accordingly set aside. The writ petition is allowed. Pending miscellaneous petitions shall stand closed in the light of this final order. No order as to costs. 11. We find that the decision of Tiara Advertizing (supra) has also been relied upon by the Hon ble High Court of Calcutta in the case of Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e . The definition of exempted service has undergone amendments from time to time and the definition as it stood from 2006 to 01.04.2011 and from 01.04.2011 onwards is reproduced below: 2006 to 1.4.2011 (e) exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act 1.4.2011 onwards (e) exempted services means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken Explanation- For the removal of doubts, it is hereby clarified that exempted services includes trading. 18. It is clear from the definition of exempted services w.e.f. 01.04.2011 that exempted services included trading. The issue that arises for consideration is whether the Explanation to rule 2(e) is prospective in nature as submitted by the appellant or it merely clarifies that trading ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll settled by the Hon ble Apex Court in context with retrospective or prospective operation of the statute, the principles enunciated in the case of Martin Lottery Agencies Ltd. (supra) will be considered as the guiding factor for deciding the issue involved in the present case. 5.6 In view of the above discussions, we do not find any infirmity in the findings recorded in the impugned order, holding that amendment to Rule 2(e) by Notification No. 3/2011-C.E.(N.T.) dated 01.03.2011 will have the prospective effect and cannot be applied retrospectively. Thus, we do not find any merits in the appeal filed by the appellant. ( emphasis supplied ) 21. The same view was expressed by the Tribunal in Lenovo (India) and the relevant paragraph is reproduced below: 7. We find that for the period 01.04.2011, the issue stands decided in the case of Mercedes Benz India Pvt. Ltd. (supra) wherein it was held that trading is not an exempted service prior to 01.04.2011; provisions of Rule 6 requiring reversal of 6% of trading turnover is not applicable. 22. It is, therefore, clear that trading was not an exempted service prior to 01.04.2011. The demand confirmed in the impugned order cannot, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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