CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL AHMEDABAD REGIONAL BENCH, COURT NO. 2 SERVICE TAX APPEAL NO. 10286 OF 2022 [Arising out of OIA-AHM-EXCUS-003-APP-98-2021-22 dated 10/02/2022 passed by Commissioner of Central Excise, Customs and Service Tax-AHMEDABAD-I]

CARGO MOTORS PRIVATE LIMITED Appellant Near Janpath Hotel, Opp. RTO office, Mehsana, Gujarat Vs.

C.S.T. -SERVICE TAX – AHMEDABAD Respondent

7^th Floor, Central Excise Bhawan, Nr. Polytechnic Ambawadi, Ahmedabad, Gujarat-380015 Appearance:

Shri Bishan R. Shah, Chartered Accountant & Shri Jagrat Shah, Advocate for the Appellant Shri Rajesh K Agarwal, Superintendent (AR) for the Respondent CORAM:

HON'BLE DR. AJAYA KRISHNA VISHVESHA, MEMBER ( JUDICIAL )

FINAL ORDER NO._10007/2026 Date of Hearing : 28/10/2025 Date of Decision : 09/01/2026 DR. AJAYA KRISHNA VISHVESHA This appeal is directed against the impugned order dated 10^th February, 2022 passed by the learned Commissioner (Appeals) through which he upheld the Order-in-Original dated 12^th February, 2021 passed by learned Assistant Commissioner and rejected the appeal.

1.1 The facts of the case in brief are that the appellant are holding service tax registration and are engaged in providing repair, reconditioning, restoration or decoration or any other similar services of any motor vehicle. During the audit of the records of the appellant for the period from April-2016 to June- 2017 conducted by the officers of Central GST Audit, Ahmedabad it was noticed that the appellant has incurred security and legal expenses for workshop / unit and availed Cenvat Credit of the service tax paid on such expenses. It was further noticed that the appellant are providing taxable services as well as carrying out trading activities (sale of its spare parts, lubricants, vehicles etc.) from the workshop. It appeared that the security and legal services availed by the appellant are common input services for providing taxable services as well as trading activities and they had not maintained separate records for the receipt, consumption etc. of the common input services received by them. The department was of the view that the appellant was liable for reversal of proportionate Cenvat Credit in terms of Rules 6 (3D) of the Cenvat Credit Rule, 2004. As per Rule 2 (e) of the Cenvat Credit Rules, 2004, exempted services includes service on which no service tax is leviable under Section 66B of the Finance Act, 1994. Trading of goods is one of the services listed in the Negative List of Services as per Section 66D of the Finance Act, 1994. Further, since trading activity is specifically included in the exempted services, the department was of the view that the appellant was liable to reverse proportionate Cenvat Credit amounting to Rs. 3,09,615/-.

1.2 In these circumstances, Show Cause Notice was issued bearing No. IV/1(b)/195/Cargo Motors Pvt Ltd / 1A / 18-19 / AP-61 dated 11^th December, 2019 seeking to recover the proportionate Cenvat Credit amounting to Rs. 3,09,615/- under the proviso to Section 73(1) of the Finance Act, 1994read with Rule 14 (i)(ii) of the Cenvat Credit Rules, 2004 along with interest under Section 75 of the Finance Act, 1994 read with Rule 14 (l)(ii) of the Cenvat Credit Rules, 2004. Imposition of penalty was also proposed under Section 78 (1) of the Finance Act, 1994 read with Rule 15 (3) of the Cenvat Credit Rules, 2004. 1.3 The Show Cause Notice as mentioned above was adjudicated vide the Order-In-Original passed by the learned Assistant Commissioner dated 12^th February, 2021 and the demand for service tax was confirmed along with interest. Penalty was also imposed under Section 78 (1) of the Finance Act, 1994 read with Rule 15(3) of the CCR, 2004.

1.4 Being aggrieved from the Order-in-Original passed by the learned Assistant Commissioner dated 12^th February, 2021. The appellant filed appeal before the learned Commissioner (Appeals).

1.5 The learned Commissioner after hearing the learned Counsel for the appellant passed the imp