CENVAT credit reversal under Rule 6(3A)(c)(ii) must use common credit in the numerator; demand unsustainable.

For reversal of CENVAT credit relating to common input services used in manufacturing dutiable goods and in providing taxable and exempted services, the computation under Rule 6(3A)(c)(ii) was held to use common CENVAT credit in the numerator, not total CENVAT credit. The issue was treated as no longer res integra, with earlier Tribunal decisions and the Bench's own prior decision in the appellants' case following Chennai Petroleum Corporation Ltd.; in the absence of any contrary binding authority, the demand was not sustainable.

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Issues: Whether, for reversing CENVAT credit attributable to common input services used in manufacture of dutiable goods and taxable and exempted services, the amount under Rule 6(3A)(c)(ii) of the Cenvat Credit Rules, 2004 is to be computed by taking common CENVAT credit or total CENVAT credit in the numerator.

Analysis: The issue had already been settled by earlier Tribunal decisions and was treated as no longer res integra. The same Bench had also decided the appellants' own case in their favour by following the ratio of Chennai Petroleum Corporation Ltd., and the Department had not shown any contrary binding decision.

Conclusion: The appellants were in taking common CENVAT credit in the numerator instead of total CENVAT credit, and the demand could not be sustained.

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