2013 (3) TMI 43 - AT - Central Excise

Tribunal Remands Case for Fresh Consideration on Cenvat Credit

The Tribunal remanded the case for fresh consideration as the adjudicating authority failed to verify the appellant's claim of maintaining separate ... Cenvat credit in respect of services denied on the ground that they have maintained separate account for the inputs, whereas they have availed credit in respect of input services in accordance with the formula prescribed in Rule 6(3)(a) - Held that:- Going through the provision of Rule 6(3)(iii), it is found that an assessee can maintain separate accounts for the input and pay an amount determined under Rule 3(a) in respect of input services. The said rule does not stand taken note of by the Commissioner. In any case, the reasons adopted by the Commissioner that the assessee has not exercised his option are not correct inasmuch as there is no requirement of filing a declaration/ option for availing said rule (iii). In any case, it is the assessee's stand that they have filed an option, which the Commissioner has not taken note of. For the reasons recorded above, the impugned order set aside and remand the matters back to the Commissioner for fresh decision after taking into account the appellant's stand that they have maintained separate account for availing the credit for the input services in the first two show cause notices and their plea that they are exempted by the provision of Rule 6(3)(iii). Issues involved:1. Availment of cenvat credit for common services in the manufacture of dutiable and exempted final products.2. Denial of credit for services due to separate accounts maintained for inputs and availed credit for input services.3. Interpretation of Rule 6(3)(iii) regarding the maintenance of separate accounts for inputs and payment for input services.Analysis:1. The first issue revolves around the appellant's availing of cenvat credit for common services used in manufacturing both dutiable and exempted final products. The appellant claimed to maintain separate records for utilizing services in each type of product. However, the adjudicating authority did not verify this claim and confirmed the demand based on Rule 6(3)(b) of Cenvat Credit Rules. The Tribunal found the authority's decision lacking verification and remanded the matter for fresh consideration.2. The second issue concerns the denial of credit for services because the appellant maintained separate accounts for inputs but availed credit for input services using a prescribed formula under Rule 6(3)(a). The adjudicating authority contended that the appellant could not adopt two alternative measures for inputs and input services. The Tribunal noted the introduction of Rule 6(3)(iii) from 01.03.2011, allowing separate accounts for inputs and payment for input services. The authority's failure to consider this provision and the appellant's claim of filing an option led the Tribunal to set aside the order for reconsideration.3. The interpretation of Rule 6(3)(iii) forms the third issue, focusing on the assessee's ability to maintain separate accounts for inputs and pay a determined amount for input services. The Commissioner did not acknowledge this rule and wrongly stated that the appellant did not exercise the option under this provision. The Tribunal clarified that no declaration or option filing was required for availing Rule 6(3)(iii). The Tribunal directed the Commissioner to reconsider the matter, taking into account the appellant's separate account maintenance and the provision of Rule 6(3)(iii) for credit availment.Overall, the judgment highlights the importance of proper verification by the adjudicating authority, adherence to specific rules governing credit availment, and the need for a correct interpretation of relevant provisions to ensure fair decision-making in matters concerning cenvat credit and input services in manufacturing processes.