The CESTAT (Ahmedabad Bench) in case of Orion Appliances Ltd. Vs CST, Ahmedabad
[Arising out of Appeal No. ST/120/09 and order dated 07-05-2010 has observed that Rule 6(2) and Rule 6(3) of the CENVAT Credit Rules, 2004 are not attracted in case where an assessee is providing ‘taxable output services’ and also undertaking ‘trading activity’.
Brief facts
- M/s. Orion Appliances Limited (‘Appellant’) was engaged in providing taxable output services as well as undertaking trading activity.
- The Appellant availed full CENVAT credit of Service Tax paid on ‘input service’ used for both the activities considering that no specific dis allowance (attributable to trading activity) exists for common input services used for both the activities under the present CENVAT Credit Rules, 2004.
- The lower authorities construed that ‘trading activity’ should be considered as ‘exempted services’ as defined under Rule 2(1)(l) of CENVAT Credit Rules, 2004 and accordingly restriction as erp Rule 62() and/or Rule 63() will apply.
- The authorities also observed that the Appellant should have maintained separate accounts in respect of input services used for ‘trading activities’ and ‘taxable output services’ liable to Service Tax.
- The Appellant preferred an appeal with the CESTAT against the order of the Commissioner of Central Excise (Appeals) and the CESTAT examined the following issues:
– Whether trading activity can be called a ‘service’?
– Whether Rule 6 of CENVAT Credit Rules, 2002 and Service Tax Credit Rules, 2002 would be applicable when input services are used in respect of trading activity as well as provision of taxable output services?
– Under circumstances where CENVAT Credit Rules, 2002 and Service Tax Credit Rules, 2002 are not applicable, the procedure to be followed by the assessee for availing input credit of Service Tax.
CESTAT Decision
