Tribunal Upholds Revenue's Calculation Method for Cenvat Credit

The Tribunal ruled in favor of the Revenue in both cases, emphasizing that the Rule clearly specified the calculation method for Cenvat credit on common input services. The appellants' arguments regarding the interpretation of the formula were rejected, and the judgments affirmed the demand for recovery and penalties imposed by the department.

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Issues:
1. Interpretation of Rule 6 (3A) (c) (iii) of Cenvat Credit Rules, 2004 regarding the calculation of Cenvat credit on common input services for dutiable and exempted goods.

Detailed Analysis:

E/41619/2017:
The appellant, engaged in manufacturing aerated water, beverages, and fruit pulp drinks, availed Cenvat credit on inputs/input services without reversing the correct amount as required under Rule 6 (3A) of Cenvat Credit Rules, 2004 due to using common input services for both manufacturing and trading activities. The dispute arose when the department claimed the appellant had not reversed the correct amount and issued a Show Cause Notice for recovery. The appellant argued that only the total common credit should be considered for applying the formula in Rule 6 (3A) (c) (iii), not the total credit availed on input services. However, the Tribunal held that the formula clearly stated that P denotes total Cenvat credit taken on input services during the financial year, rejecting the appellant's argument and ruling in favor of the Revenue.

E/41533/2017:
In this case, the appellant, involved in manufacturing vehicle parts and trading various items, availed Cenvat credit on common input services but reversed a proportionate credit attributed to trading goods following the formula under Rule 6 (3A) of Cenvat Credit Rules. The department issued a Show Cause Notice for recovery, and penalties were imposed by the original authority. The appellant contended that the total common credit on input services should be considered for calculation, not the total credit availed. The Tribunal reiterated that P in the formula denotes total Cenvat credit taken on input services, emphasizing that no ambiguity existed in the rule's wording. The Tribunal dismissed the appeals, upholding the demand of the Revenue.

In both cases, the Tribunal emphasized that the Rule clearly specified the calculation method for Cenvat credit on common input services and rejected the appellants' arguments regarding the interpretation of the formula. The judgments were delivered in favor of the Revenue, affirming the demand for recovery and penalties imposed.

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