K. Anpazhakan ORDER
Ashok Jindal, Member (J)
1. By way of this appeal, the appellant has challenged the demand of 5%/6% of the value of the exempted services provided by the appellant during the impugned period i.e. 2009-10 to 2013-14.
2. The facts of the case are that the appellant is engaged in providing "stock broking service" to their clients. The appellant also undertakes self-trading. Therefore, they maintained two separate sets of books of account by using two separate softwares for recording income and expenses accordingly. All the expenses pertaining to each vertical, stock broking and self-trading are recorded in their respective books of account. The taxes charged on input services availed in respect of stock broking services are taken as cenvat credit by the appellant whereas no cenvat credit was availed in respect of input services related to self-trading. The major expense incurred by the appellant is of transaction charge which is recognized as expense in both the sets of accounts. The taxes charged limited to transaction charges attributed to stock broking services are availed as cenvat credit by proportionate reversal of cenvat credit attributable to self-trading.
2.1. The facts that the appellants are maintaining separate books of accounts has been intimated by them to their jurisdictional authority in the year 2008.
2.2. In 2012, audit of their records was conducted by CERA, when the fact regarding maintenance of separate books of account for brokerage activity and self-jobbing activity were examined and only in respect of one input service i.e. "transaction charges" being a common input service, proportionate reversal was not done due to omission by the appellant, which was done during such audit by CERA.
2.3. Again in 2013, the appellant intimated to the Range Superintendent that the transaction charges introduced since 2009 was common and proportionate cenvat credit was reversed during CERA Audit. In case of all other input services, proportionate cenvat credit reversed regularly and found in order by CERA and Departmental audits in previous years.
2.4. In these set of facts, it was alleged that the appellant has taken cenvat credit on common input services used in exempted as well as taxable services and involving non-payment of claim at applicable rate of value on exempted services in terms of Rule 6 (3) and 6 (3B) of the said Rules. On scrutiny of ST-3 Returns as well as cenvat credit records, it revealed that the appellants have taken cenvat credit on common input services i.e. rent, banking, telephone, repair & maintenance, insurance, postage & courier, audit fees, internet broadband services, professional fee, software charges etc. These input services are used for providing output services, which are chargeable to tax as well as exempted services. During the said period, the appellant did not maintain separate account for receipt and use of input services for provision of such exempted service and for provision of taxable output service. Accordingly, in terms of Rule 6 (3) of the Cenvat Credit Rules, 2004, they are required to pay 5%/6% of the value of exempted services.
2.5. In these set of facts, two show-cause notices were issued to the appellant for payment of amount equal to 5%/6% of the value of exempted services.
2.6. The appellant contested the show-cause notices, but the adjudicating authority without examining the records and the facts of the case, passed the impugned order holding that the appellant is required to pay the amount equal to 5%/6% of the value of exempted services in terms of Rule 6 (3) of the Cenvat Credit Rules, 2004.
2.7. Aggrieved from the said order, the appella........