Tribunal remands case for determining reversal amount on input services for exempted output.

The Tribunal remanded the case to the adjudicating authority to determine the specific amount to be reversed on input services used for providing exempted output services. The appeal was allowed solely for this purpose.

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Issues:
1. Whether the appellant is required to pay 6% / 8% of the value of exempted services due to common input services used for both exempted and taxable services during a specific periodRs.

Analysis:
The appeal was filed against an order dated 30.7.2014 passed by the Commissioner of Central Excise, Aurangabad, regarding the availing of cenvat credit on input services for providing taxable and exempted output services from 1.4.2008 to 31.3.2011. The appellant failed to maintain separate records as required by Rule 6(3A) of the Cenvat Credit Rules, 2004, leading to a demand of recovery amounting to Rs. 82,97,036. The demand was confirmed with interest and penalty, prompting the appeal.

The appellant's Chartered Accountant admitted the lack of separate records but highlighted the reversal of the entire cenvat credit amount availed on input services used for exempted services, along with interest payment on 20.1.2015. He argued that despite the reversal, payment of 6%/8% of the value of exempted services under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 should not be mandatory. Referring to judgments like CCE, Chennai- II vs. Mount Mettur Pharmaceuticals Ltd. and CCE vs. Goyal Proteins Ltd., the appellant contended against the insistence on such payment.

The Revenue's Assistant Commissioner supported the Commissioner's findings. The Tribunal examined the core issue of whether the appellant must pay 6% / 8% of the value of exempted services for using common input services for both exempted and taxable services during the mentioned period. Considering the appellant's reversal of the credit with interest, the Tribunal referred to judgments by the Madras High Court and Rajasthan High Court to support the appellant's argument. The Tribunal decided to remand the matter to the adjudicating authority to determine the exact amount to be reversed on the input services used for providing exempted output services. The appeal was allowed solely for the purpose of remand.

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