Cenvat credit reversal for common input services may qualify as non-availment, supporting exemption subject to factual verification.

Omission to consider the assessee's pleaded alternative basis for exemption under Notification No. 01/2006-ST, namely that reversal of Cenvat credit on common input services amounted to non-availment of credit, was treated as an error apparent in the order. The tribunal accepted that, if such reversal was established, the exemption could not be denied on that ground. As the factual position on reversal had not been verified, the matter was remanded for that limited inquiry and a fresh decision, and rectification was allowed.

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Issues: Whether the omission to consider the assessee's alternative plea that reversal of Cenvat credit on common input services entitled it to exemption under Notification No. 01/2006-ST warranted rectification and remand.

Analysis: The omitted contention had been raised in the appeal memorandum but was not dealt with in the earlier order. The omission constituted an error apparent in the order. The substituted reasoning accepted that reversal of credit relatable to the alleged common services could amount to non-availment of credit, and that the benefit of the exemption notification could not be denied if such reversal was established. The matter therefore required factual verification on whether the credit had in fact been reversed.

Conclusion: The rectification was allowed and the matter was remanded for verification of the facts and fresh decision in the light of the stated principle.

Final Conclusion: The assessee obtained correction of the earlier order and a fresh adjudication opportunity on the reversed-credit plea.

Ratio Decidendi: Reversal of credit attributable to the relevant input services can be treated as non-availment of credit for the purpose of exemption, and omission to decide such a material plea in the original order is rectifiable.

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