Tribunal upholds 6% demand for non-compliance with CCR 2004. Penalties confirmed.

The Tribunal upheld the demand of 6% of the value of exempted services against the appellant for failure to comply with Rule 6(3) of CCR 2004 by not reversing the proportionate credit. Penalties were also confirmed due to the appellant's non-disclosure of availed credit on common input services. The appeal was rejected, affirming the imposition of the demanded amount and penalties. The Tribunal deemed the appellant's argument of maintaining separate records inadequate in relation to common input services in the Corporate Office.

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Issues:
- Whether the appellant is liable to pay an amount as 6% of the value of exempted services under Rule 6(3)(i) of CCR 2004.
- Whether penalties are imposable on the appellant.

Analysis:
1. The appellant was found to have taken CENVAT Credit on common input services used for both taxable and exempted services without maintaining separate accounts as required under Rule 6(2) of CCR 2004. The show cause notice demanded various amounts, including 6% of the value of exempted services, non-payment of service tax, irregular credit on input services, and interest and penalties.

2. The lower authority initially dropped all demands, but on appeal by the Revenue, the first appellate authority confirmed some demands, including the demand of 6% of the value of exempted services due to the appellant's failure to maintain separate records. The appellant appealed seeking to drop the demand and penalties, conceding the remaining amounts.

3. The appellant argued that they maintained separate records for each project, but the Revenue contended that the appellant availed CENVAT Credit on common input services used in the Corporate Office without reversing the proportionate credit for exempted projects, as required by Rule 6(3) of CCR 2004.

4. The appellant admitted to availing CENVAT Credit on input services in the Corporate Office without reversing the proportionate credit for exempted projects. The appellant maintained separate accounts for services used in projects but not for common input services in the Corporate Office.

5. The Tribunal upheld the demand of 6% of the value of exempted services as the appellant failed to reverse the proportionate credit or pay the required amount under Rule 6(3) of CCR 2004. The Tribunal also found no infirmity in imposing penalties as the appellant did not disclose availing credit on common input services in the Corporate Office.

6. The appeal was rejected, upholding the impugned order confirming the demand of 6% of the value of exempted services and penalties. The Tribunal found the appellant's argument of maintaining separate records for each project insufficient regarding common input services in the Corporate Office.

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