TaxTMI 
TaxTMI 
2017 (11) TMI 606
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.... / input services. During verification of records it was noticed that for the period from 12/2012 to 3/2014 the appellants have not reversed the correct amount of credit as required under Rule 6 (3A) of Cenvat Credit Rules, 2004. The appellants were using common input services for manufacturing activity as well as trading activity and did not maintain separate accounts. Trading being an exempted service with effect from 1.4.2011, the input services commonly used for manufacture of dutiable and trading activity is not fully eligible and the appellant has to reverse credit applying the formula laid in Rule 6 (3A)(c). According to department, appellant though ought to reverse Rs. 6,25,072/- had reversed only lesser amount. Show Cause Notice wa....
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....n input services, the appellant reversed proportionate credit attributable to trading of goods as per the formula prescribed under Rule 6 (3A) of the Cenvat Credit Rules. The reversal was made as per the following calculation : Value of Trading Turnover __________________________________x Cenvat credit taken on common input services Total Turnover (Manufacture + Trading) 3. The department was of the view that in the formula, the total credit availed on input services has to be applied and not the total 'common' credit on input services. Thus Show Cause Notice for the periods 4/2013 to 3/2014 and 4/2014 to 3/2015 were issued proposing to recover the differential amount alongwith interest and also proposi....
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....at this amendment should be made retrospectively applicable. Further from such amendment, the intention of the government is clear that total credit used in the formula means total common credit. 5. Against this, the Ld.AR, Shri A.Cletusand Shri K.P.Muralidharan reiterated the findings in the impugned order. It was submitted that as per the said Rule, P denotes total cenvat credit. Nothing can be read into the law. There is no ambiguity and therefore the contention of appellant cannot be accepted. 6. Heard both sides. 7. For better appreciation Rule 6 is reproduced as under : Rule 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services.- (1) The CENVAT credit shal....
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.... of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely :- (i) the manufacturer of goods shall pay an amount equal to five per cent of value of the exempted goods and the provider of output service shall pay an amount equal to six percent of value of the exempted services; or (ii) the manufacturer of goods or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A). Explanation I....
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....ctured and removed, during the financial year, and P denotes total CENVAT credit taken on input services during the financial year : 8. The above Rule stipulates that Cenvat credit shall not be allowed on inputs / input services used in the manufacture of exempted goods or exempted services. The appellant is manufacturing dutiable goods and is also engaged in trading. Trading is deemed to be an exempted service as per the explanation introduced with effect from 1.4.2011 to the definition of 'exempted service'. The appellant is using input services exclusively for dutiable goods and are availing entire credit on such input services. They are also availing certain other input services which are used commonly for manufacture of duti....