Tribunal interprets Cenvat credit rule, excludes services for dutiable goods

The Tribunal upheld the Commissioner (Appeals) Rajkot's jurisdiction, interpreting "total Cenvat credit" under Rule 6(3A) to include only common input services, not those used exclusively for dutiable goods. The amendment to Rule 6(3A) by Notification No. 13/2016-CE was held to apply retrospectively. The Tribunal dismissed Revenue's appeals, confirming the jurisdiction and interpretation, and correcting a clerical error in appeal numbers.

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Issues Involved:
1. Jurisdiction of the Commissioner (Appeals) Rajkot.
2. Interpretation of "total Cenvat credit" under Rule 6(3A) of the Cenvat Credit Rules.
3. Retrospective applicability of the amendment to Rule 6(3A) by Notification No. 13/2016-CE.

Detailed Analysis:

1. Jurisdiction of the Commissioner (Appeals) Rajkot:
The Revenue contended that the Commissioner (Appeals) Rajkot had no jurisdiction over appeals related to the Dahej unit, which falls under the jurisdiction of the Commissioner (Appeals) Vadodara. However, the respondent argued that post-GST regime, centralized registration for all units within a state is maintained. The Tribunal agreed with the respondent, citing a Board Circular No. 1056/05/2017-CX dated 29.06.2017, which clarifies that in the GST regime, centralized registration for principal states applies, and thus, the Commissioner (Appeals) Rajkot had jurisdiction over the principal business location of the assessee. Consequently, the jurisdictional objection raised by the Revenue was dismissed.

2. Interpretation of "total Cenvat credit" under Rule 6(3A) of the Cenvat Credit Rules:
The primary dispute was whether "total Cenvat credit" in Rule 6(3A) includes only common input services or also input services used exclusively for dutiable goods. The respondent argued that "total Cenvat credit" should refer only to common input services, as including input services used exclusively for dutiable goods would unjustly disallow credit that is otherwise fully eligible. The Tribunal supported this interpretation, stating that if the Revenue's interpretation were accepted, it would lead to the disallowance of credit on input services used in dutiable goods, which is not intended by the Cenvat Credit Rules. The Tribunal emphasized a harmonious and conjoint reading of Rule 6(1), (2), and (3), concluding that "total Cenvat credit" under Rule 6(3A) pertains only to common input services.

3. Retrospective applicability of the amendment to Rule 6(3A) by Notification No. 13/2016-CE:
The respondent argued that the amendment to Rule 6(3A) by Notification No. 13/2016-CE, which clarified the calculation of "total Cenvat credit," should apply retrospectively as it was curative and intended to remove doubts. The Tribunal agreed, referencing the Supreme Court's judgment in the case of GOI vs. Indian Tobacco Association, which held that a substitution in law, intended to correct an obvious mistake, should have retrospective effect. The Tribunal concluded that the amended Rule 6(3A) should apply retrospectively, meaning the "total Cenvat credit" for reversal calculation includes only common input services, not those used exclusively for dutiable goods.

Conclusion:
The Tribunal upheld the order of the Commissioner (Appeals), dismissing the Revenue's appeals and stay applications. It confirmed that the Commissioner (Appeals) Rajkot had the correct jurisdiction and that the "total Cenvat credit" under Rule 6(3A) should be interpreted to include only common input services. The amendment to Rule 6(3A) by Notification No. 13/2016-CE was deemed to have retrospective effect. The Tribunal also noted and corrected a clerical error in the appeal numbers recorded by the registry.

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