M/s. Messer Cutting Systems India Pvt. Ltd. Versus Commissioner of GST & Central Excise Coimbatore
Central Excise
2018 (9) TMI 981 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 14-9-2018
E/41218/2018 – Final Order No. 42416/2018
Central Excise
Ms. Sulekha Beevi C.S., Member (Judicial)
For the Appellant : Shri M. Saravanan, Consultant
For the Respondent : Shri B. Balamurugan, AC (AR)
ORDER
The appellants are manufacturers of CNC machines and are availing the facility of CENVAT credit on inputs, capital goods and service tax credit on inputs service. On verification of records, it appeared to the department that when the appellants removed inputs as such, the activity tantamounts to trading activity and therefore are not eligible for the entire common credit of input services used for trading activity as well as manufacturing of final products. Show cause notice was issued raising the above allegations and proposing to demand 5% / 6% of 10% of the value of t
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not eligible for the credit on input services attributable to trading is incorrect and on wrong interpretation of law. He relied upon the decision of the Tribunal in the case of Lakshmi ring travellers (CBE) Ltd. Vs. Commissioner of Central Excise, Coimbatore vide Final Order No. 42443/2017 dated 27.10.2017; Commissioner of Central Excise, Ghaziabad Vs. UP Telelinks – 2015 (329) ELT 888 (Tri. Del.) and Commissioner of Central Excise, Ghaziabad Vs. Mahaveer Cylinders Ltd. – 2016 (341) ELT 361 (Tri. All.).
3. The ld. AR Shri B. Balamurugan supported the findings in the impugned order. He submitted that the appellants were clearing the spare parts and consumables which were purchased from other manufacturers to the customers. The said activity is nothing but a trading activity. Hence having not maintained separate accounts for the common input service used for manufacture of finished goods as well as trading activity, they are liable to pay the amount as contemplated under Rule 6(3A) of
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in the case of Lakshmi ring Travellers (CBE) (supra) had occasion to consider the very same issue and observed as under:-
“5. It is brought out from the facts that the appellant has reversed the credit when the inputs are removed as such from the factory. The department has taken the view that such removal amounts to trading and has directed the appellant to expunge the credit to the extent of the value of inputs removed by them. In fact, such removal of inputs from one factory to the sister unit under the excise law by reversing the credit cannot be considered as a trading activity requiring the appellant to reverse the CENVAT credit availed on input services. I find that the issue of show cause notice as well as the confirmation of demand is without any legal basis. The impugned order is set aside and the appeal is allowed with consequential relief, if any.”
6. Similar view was taken by the Tribunal in the case of UP Telelinks (supra) and Mahaveer Cylinders Ltd. (supra) cited by
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