Cenvat credit for excisable goods held admissible where services were tied to manufacture, not common input use.

Cenvat credit attributable to the manufacture of excisable goods was treated as admissible under Rule 6(1) of the Cenvat Credit Rules, 2004, because the disputed input services were linked to dutiable production rather than to common services requiring apportionment under Rule 6(2), Rule 6(3) or Rule 6(3A). On that basis, the demand built on an assumed obligation to follow Rule 6(3A) was considered to rest on an incorrect foundation. The show cause notices and the orders denying credit were therefore set aside.

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Issues: Whether Cenvat credit availed on input services attributable to excisable goods was admissible under Rule 6(1) of the Cenvat Credit Rules, 2004, and whether the show cause notices and the orders denying such credit were sustainable.

Analysis: The credit in dispute was found to be relatable to the manufacture of excisable goods, and not to common input services used for both exempted and dutiable products in a manner attracting the apportionment mechanism under Rule 6(2), Rule 6(3) or Rule 6(3A) of the Cenvat Credit Rules, 2004. On that basis, the credit fell within Rule 6(1), which permits availment of credit attributable to excisable goods. Since the demand proceeded on the assumption that the appellant had to follow the procedure under Rule 6(3A), the foundation of the notices was held to be incorrect.

Conclusion: The credit was held admissible under Rule 6(1) of the Cenvat Credit Rules, 2004, and the show cause notices as well as the impugned orders were set aside.

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