CENVAT reversal formula excludes input services used only for dutiable goods, and the balance demand, interest and penalty fell.

For reversal under Rule 6(3A) of the CENVAT Credit Rules, 2004, only common input service credit forms the relevant base; credit used exclusively in manufacturing dutiable goods cannot be included in the formula. On that reading, the Tribunal found the Revenue's computation unsustainable because the appellant had reversed credit on the basis of accounts and a Chartered Accountant's certificate, with no specific challenge to the reversal method or any short payment. The amount already paid was appropriated, but the remaining demand, interest and penalty were set aside.

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Issues: Whether, for the purpose of reversal under Rule 6(3A) of the CENVAT Credit Rules, 2004, the credit taken on input services used exclusively for dutiable goods could be included in the total CENVAT credit base, and whether the demand, interest and penalty could be sustained.

Analysis: The dispute turned on the computation of CENVAT credit attributable to exempted clearances, particularly sale of electricity. The Tribunal followed its earlier view that, on a conjoint reading of Rule 6(1), Rule 6(2) and Rule 6(3A) of the CENVAT Credit Rules, 2004, the relevant base for the formula is confined to common input services and cannot extend to input services used exclusively in the manufacture of dutiable goods. The appellant had reversed credit on the basis of accounts and a Chartered Accountant's certificate, and there was no specific allegation challenging the method of reversal or any short payment.

Conclusion: The demand confirmed by the Revenue was unsustainable. The appropriation of the amount already paid by the appellant was upheld, while the balance demand, interest and penalty were set aside.

Ratio Decidendi: For reversal under Rule 6(3A) of the CENVAT Credit Rules, 2004, only common input service credit forms the relevant base, and credit exclusively relatable to dutiable goods cannot be included in the formula.

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