CENVAT credit reversal on interest income as exempted service remanded for fresh adjudication due to incomplete records.

Rule 6 of the CENVAT Credit Rules, 2004 could not be conclusively applied on the available record because the details of common credit taken and utilised during the relevant period were incomplete. The demand rested on treating interest income from banking activity as an exempted service, but the Tribunal found that the exact reversal, if any, could not be determined without proper verification. The original authority had not examined the matter in the correct statutory framework, so the issue, including the assessee's submissions and relevant judicial decisions, was remanded for fresh adjudication.

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Issues: Whether the demand raised under rule 6 of the CENVAT Credit Rules, 2004, based on the treatment of interest income as exempted service, could be sustained on the facts available, and whether the matter required fresh adjudication by the original authority.

Analysis: The dispute turned on the manner in which credit common to taxable and exempted services was required to be reversed under rule 6 of the CENVAT Credit Rules, 2004. The impugned demand proceeded on the basis that interest received in the course of banking activity constituted exempted service, but the record before the Tribunal did not contain adequate details of the credit taken and the credit utilized during the relevant period. In the absence of such particulars, the exact reversal, if any, could not be determined conclusively. The Tribunal therefore held that the original authority had not examined the matter in the correct statutory framework and that the submissions of the assessee and the applicable judicial decisions required reconsideration.

Conclusion: The demand was not finally sustained on the available record, and the matter was sent back for fresh decision by the original authority.

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