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TMI Blog2024 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit to be reversed as held by both the authorities below after applying the formula given in Rule 6(3A) of Cenvat Credit Rules. It is found that Ahmedabad Bench of the CESTAt in the case of Orion Appliances Ltd. [ 2010 (5) TMI 85 - CESTAT, AHMEDABAD] , it was held that ' Naturally this cannot be done in advance since it may not be possible to forecast what would be the quantum of trading activity and other activity which is liable to service tax. The only obvious solution which would be legally correct appears to be to ensure that once in a quarter or once in a six months, the quantum of input service tax credit attributed to trading activities according to standard accounting principles is deducted and the balance only availed for the purpose of payment of service tax of output service.' In view of the statutory provisions as prescribed in Rule 6(3A) of the Cenvat Credit Rules and the decision of the Orion Appliances Ltd., it is found that there is no infirmity in the impugned order - the appeal is dismissed. - MR. S. S. GARG, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Present for the Appellant: Ms. Neha Somani, CA Present for the Respondent: Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Rule 15 of the Credit Rules. After following the due process, the adjudicating authority confirmed the demand of Rs. 2,70,184/- (out of total demand of Rs. 2,72,720/-, demand of Rs. 2,536/- was vacated) against the appellants alongwith interest and imposed penalty of Rs. 2,70,184/- equivalent to the demand confirmed under Rule 15 of the Cenvat Credit Rules and Rs. 100 per day or one percent per month on the demand confirmed, whichever is higher starting with the first day after due date till the date of actual payment of service tax provided that the total amount of penalty payable in terms on this account shall not exceed fifty percent of the service tax payable, under Section 76 of the Act. Aggrieved by the said order, the appellant filed before the commissioner (Appeals). 3. Heard both the parties and perused the material on record. 4. Ld. Counsel appearing on behalf of the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. She further submits that the show cause notice was issued by relying upon para 8 of the judgment in the case of M/s Orion Appliances Ltd Vs. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CE(NT) dated 01.03.2011, the definition of exempted service has been amended to cover Trading activities . He further submits that the appellant is not disputing that the Cenvat credit is not permissible on trading activities, however they relied upon the certificate issued by Chartered Accounted dated 26.10.2013 wherein share of amount related to trading activities as well as taxable activities were calculated on the basis of area occupied under both the activities. 5.2 He further submits that the adjudicating authority in para 17 of the Order has observed that in the instant case the amount of inadmissible credit is to be determined as per formula given in Rule 6(3A) of the Cenvat Credit Rules, 2004, therefore the benefit of certificate issued by the Chartered Accountant cannot be given to the appellant. The Ld. DR also took us through the provisions of Rule 6(3A) of CCR, 2004; he further submits that on the basis of the formula given in Rule 6(3A) of the Cenvat credit Rules; the adjudicating authority after taking into account the value of taxable service, value of taxable goods; margin of profit of trading activities; percentage of liable inputs of taxable services and percent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisionally, for every month,- (i) the amount equivalent to CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional)= (B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of taxable services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A; (iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services (provisional) (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer of goods or the provider of output service may adjust the excess amount on his own, by taking credit of such amount; (g) the manufacturer of goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of payment or adjustment, as per condition (d) and (f) respectively, the following particulars, namely:- (i) details of CENVAT credit attributable to exempted goods and exempted services, monthwise, for the whole financial year, determined. provisionally as per condition (b), (ii) CENVAT credit attributable to exempted goods and exempted services for the whole financial year, determined as per condition (c). (iii) amount short paid determined as per condition (d), alongwith the date of payment of the amount short-paid, (iv) interest payable and paid, if any, on the amount short-paid, determined as per condition (e), and (v) credit taken on account of excess payment, if any, determined as per condition (f). (h) where the amount equivalent to CENVAT credit attributable to exempted goods or exempted services cannot be determined provisionally, as prescribed in condition (b), due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put services can be used for payment of service on output service provided the input services have been used for providing the output services. No doubt there is no one to one correlation required. This is the reason why provisions have been made in Cenvat Credit Rules and Service Tax Credit Rules to cover such situations where an assessee is providing both exempted and taxable services. In cases where 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 exclude the same from the records maintained for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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