TaxTMI 
TaxTMI 
TaxTMI 
2013 (3) TMI 381
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....isionally as per Rule 6(3A)(b) of the said Rules during 2008-09 and the balance of Rs. 5,81,020/- was duly reversed by them in Jun' 2009 as per Rule 6(3A)(f) of the said Rules. 2. The appellant revised their computation of final reversal of Cenvat credit under Rule 6(3)(ii) for the financial year 2008-09 stating that they had, earlier, omitted to exclude the clearances to SEZ/EOU/United Nations/Export under bond/CT-2 clearances which fall under Rule 6(6) for the purpose of computation of final reversal under Rule 6(3A)(c) of the said Rules. As per this revised working, the final reversal of Cenvat credit under the said Rule was computed by them at Rs. 2,02,11,326/- as against the Cenvat credit of Rs. 3,57,05,504/- actually reversed by them. Thus, arriving at an excess reversal of Rs. 1,54,94,177/- the appellant, sought the adjustment of the excess amount by taking credit in terms of Rule 6(3A)(f) of the said Rules. 3. After due process of law, the Lower adjudicating authority (LAA) held that the appellant had considered only the 'common inputs' and 'common input services' for the purpose of computation for Rule 6(3A)(c)(ii) & (iii) of the said Rules respectively whereas the total....
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.... goods/taxable services; (iv) that the values for "L" and "P" given in the Rule are to be read in the context and not in isolation and the impugned order giving artificial meaning and values for the factors in the formula is incorrect; (v) that regarding electricity wheeled out to TNEB, the Excise duty involved on Refinery Fuel Oil (RFO) and Naphtha attributable to electricity supplied to TNEB is paid every month by the appellant and shown in their ER-1 returns. 5. Shri K.S. Venkatagiri, Advocate, duly authorized by the appellant appeared before me at 1200 Noon on 20-9-2011. During the Hearing the Advocate in addition to reiterating the submissions in the Appeal Memorandum has also filed additional synopsis/additional submission which has been taken on record. During the hearing the Advocate has submitted that this is an issue where for the purpose of computation payment under Rule 6(3A)(c)(ii)&(iii) of CCR' 2004 the department wants to take the credit availed on the inputs and input services which were used exclusively in the manufacture of dutiable products. In this regard the Advocate has submitted that the total Cenvat credit used in the above Rule relates to only the common....
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....cturer of dutiable and exempted goods. Thus, the credit of service tax paid on input services exclusively used in dutiable goods is not covered under Rule 6 but covered under Rule 3 of the said Rules. Accordingly, the service tax paid on input services used exclusively in providing taxable services will also remain outside the ambit of application of Rule 6. The provisions of Rule 6(3) are only procedural and cannot take away the right to avail credit fully on inputs and input services used in the dutiable goods or taxable services. The appellant placed reliance on the following decisions : (i) CCE v. Home Ashok Leyland Ltd. [2007 (210) E.L.T. 178 (S.C.)] : Held : Rule 57E ibid was procedural, clarificatory, hence, would not affect substantive rights of manufacturer of specified final product to claim Modvat credit for duty paid on inputs subsequent to date of receipt of those inputs. (ii) Foods, Fats & Fertilizers Ltd. v. CCE [2009 (247) E.L.T. 209 (Tri.-Bang.)]: HELD : Rule 6(3A) ibid not a substantive provision but a procedural provision - Amendment having retrospective effect. 8.2 The impugned order has been passed against the provision of Rule 6(3)(ii) of the said Rules, wh....
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.... the option to maintain the separate accounts or payment of 8% of the price of the exempted goods can be exercised only in respect of common inputs used for the manufacture of dutiable and exempted goods. ........" Thus when the Board has clarified that the Rule 6 is only for common input and input services, the question of including the input and input services exclusively used in the dutiable goods does not arise. 8.5 The provisions of Rule 6(3) during the impugned period as well as the provisions of Rule 57CC of erstwhile Central Excise Rules, 1944, are meant to cover situations where an assessee avails Cenvat credit on inputs used in exempted products and is not able to maintain separate accounts and to demand 8% amount in the above rules is to neutralize the Cenvat credit attributable to the inputs used in the exempted products. The Explanatory Notes to Budget Changes 1996-97 explains the rationale behind the introduction of Rule 57CC, which reads, "...............when he clears the fully exempted final product, he is required to reverse the credit taken on inputs contained in the exempted final product..........." From the above it is clearly stipulated that what is sough....
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....alues for "L" and "P" given in the Rule are to be read in the context and not in isolation and the impugned order giving artificial meaning and values for the factors in the formula is incorrect. It is seen that the impugned order reads the (ii) and (iii) of sub-clauses (c) Rule 6(3A) in isolation and not the sub-clause (c) as a whole which reads as under : "(c) the manufacturer of goods or the provider of output service, shall determine finally the amount of Cenvat credit attributable to exempted goods and exempted services for the whole financial year in the following manner, viz., (i) the amount of Cenvat credit attributable to inputs used in or in relation to manufacture of exempted goods, on the basis of total quantity of inputs used in or in relation to manufacture of said exempted goods, denoted as H; (ii) ...........and L denotes total Cenvat credit taken on inputs during the financial year minus H : (iii) ...........and P denotes total Cenvat credit taken on input services during the financial year." The impugned order reads the underlined portions of (ii) and (iii) which is disconnected to the underlined portion of (c) above. By ma....