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TMI Blog2024 (8) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... being so the period during which the input credit was taken cannot find shelter from credit reversal, just because as per the appellants averments, Notification No. 3/2011-CE (NT) dated 1.3.2011 did not considered trading as an exempted service prior to the introduction of explanation, in Rule 2 of Rules, w.e.f. 01.04.2011 and the notification did not have retrospective effect. The fact whether trading is an exempted service or not is not a relevant consideration, so long as the output for which the input credit is taken, itself is neither a service nor excisable goods. CENVAT credit taken on House Keeping Services, Courier Services, Hospitality services and Car hiring services - HELD THAT:- Restriction on input used for personal use or consumption of employees etc. came about only after 01/04/2011. There is nothing to show that the said services were not used for the provision of output service. Further considering the low tax amount involved in these appeals and the appellant being prima facie eligible for the refund it would be in order, to grant such benefits without straining the plain words of the section at this distant date. Statutory interest - HELD THAT:- The same would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Refund claim particulars Amount (Rs.) 1. Proportionate CENVAT credit relating to trading 39,79,616 2. CENVAT credit on various input services 98,578 3. Interest 4,45,146 Total 45,23,340 Thereafter, a Show Cause Notice dated 1.2.2012 was issued directing the appellant to justify the refund claim. He relied on the decision of the Tribunal in the case of M/s. Kiran Motors Ltd. Vs. CCE, Surat reported in 2012-TIOL-265-CESTAT-AHM which held that input credit is available on trading activity also. Further Notification No. 3/2011-CE (NT) dated 1.3.2011 which amended the definition of exemption services as per Rule 2(e) of CENVAT Credit Rules, 2004, specifically inserted an explanation that exempted services would include trading and the restriction on availing CENVAT credit on trading activity arises only from 1.4.2011. Since the amendment is prospective and the period in dispute is prior to 1.4.2011, the ratio of the various High Court decisions relied on by the appellants would squarely apply to the case on hand. In the circumstances the interest amount is also liable to be refunded to the appellants. He prayed for favourable orders. 4. The Ld. AR reiterated the findings in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o creation of such fiction, there is no scope at all even to consider the trading activity to be covered under the credit scheme. After the explanation, the position is more clear to the effect that the trading activity can be considered as an exempted service for the operation of scheme under Cenvat Credit Rules. In other words, prior to that clarification, in the absence of such explanation, trading is not at all covered by the credit scheme. Accordingly, we find the appellants should not have availed credit for common input services which are used for taxable output service as well as trading activity, as it is imperative to identify and reverse that amount of credit attributable to the trading activity. We find no infirmity in the findings of the original authority on merit or on quantification. On an appeal filed by the appellant, Hon ble High Court of Delhi while deciding the above case in 2018 (17) GSTL 422 (Del) held that : 16. Therefore, the issue is whether the assessee could claim the credit on input which were not services. Input credits can be used for payment of service on output service provided such services are used to provide output services. Undoubtedly, there ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. We do so. Therefore, we do not find any infirmity in the findings of the adjudicating authority as far as the denial of the CENVAT credit on input services used in trading is concerned. This being so the period during which the input credit was taken cannot find shelter from credit reversal, just because as per the appellants averments, Notification No. 3/2011-CE (NT) dated 1.3.2011 did not considered trading as an exempted service prior to the introduction of explanation, in Rule 2 of Rules, w.e.f. 01.04.2011 and the notification did not have retrospective effect. The fact whether trading is an exempted service or not is not a relevant consideration, so long as the output for which the input credit is taken, itself is neither a service nor excisable goods. 7. As stated in the judgment extracted above, Lally Automobiles case being affirmed by the Hon ble Apex Court has become the law of the land and requires to be followed. Judgments cited by the appellant are hence of no avail. This being so the order of the Ld. Commissioner (Appeal) rejecting the refund claim and approving the reversal of the proportional service tax input credit taken on trading activity cannot be faulted. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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