Rule 6 of the Cenvat Credit Rules, 2004  deals with the circumstances in which assessee provides taxable as well as exempted services. For this purpose different provisions have been incorporated in the rule.

Rule 6(3) of the Cenvat Credit Rules, 2004 restricts the credit to the extent of 20% of service tax payable in case assessee is providing taxable as well as exempted services.

Rule 6(5) of the Cenvat Credit Rules, 2004 allows 100% credit of cenvat credit on certain 16 services if used commonly on taxable as well as exempted services.

Rule 6(5) is the overriding provisions, but department has attempted to deny the benefit of rule 6(5) alongwith rule 6(3).

In an appeal against the decision of adjudicating officer, the assessee has preferred an appeal and while deciding the appeal the, Ld. Commissioner (Appeals) has interpreted the provisions liberally and allowed the benefit of rule 6(3) alongwith 6(5). 

For full text of judgment - visit 2008 -TMI - 2923 - COMMISSIONER (A) Also see in Cenvat Credit an ebook

1  Ch. No. 09 - Exempted Goods / Services - Common

2  Ch. No. 09-A - Exempted Goods - Manufacturer

3  Ch. No. 09-B - Exempted Services - Service Provider

4 Ch. No. 09-C - Exempted Services: - Special provision for General Insurance Companies

Cenvat credit availability: general cap reconciled with categorical full-credit exceptions for commonly used services. Cenvat credit rules distinguish a general partial credit limitation applicable where taxable and exempted services coexist and an overriding provision listing specified services eligible for full credit when commonly used; administrative practice has included attempts by the department to apply the general limitation alongside the full-credit list and appellate interpretation reconciling the cap with the categorical full-credit exceptions for commonly used services.