2018 (7) TMI 409

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....ey also render certain services which are taxable under Finance Act, 1994; likewise, they are recipients of certain taxable services on which they, in terms of Service Tax Rules, 1994, are 'persons liable to pay tax', albeit partly, subject to certain conditions. Of particular relevance, is the liability under 'goods transport agency' service for which they discharge only a quarter subject to providers of service not availing CENVAT credit of 'inputs'/' input services'. 2. During 2011-2012 and 2012-2013, the appellant, under the impression that the abated payment as 'person liable to pay tax' is an exempt service, referred to in rule 2(e) of Service Tax Rules, 2004, considered itself obliged to comply with rule 6(3) of CENVAT Credit Rule....

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....r attributable to, manufacture of exempt goods/rendering of exempt services, a formula for ascertaining the quantum of duty/tax form on such inputs/input services to be reversed has been specified in addition to requiring reversal of the inputs used in the manufacture of exempted final product. The formula has been designed separately for inputs, as well as input services, used in common for manufacture of exempt goods and/or for rendering exempt services along with dutiable goods and/or taxable service. The specifics of the formula are critical to this appeal and must needs reproduction here: "Rule 6(3A) (b) (c) (3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the pr....

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....ce denotes the total value of duty when goods manufactured and removed plus the total value of taxable services provide cluster total value of exempted services provided, doing the preceding financial year and D denotes total CENVAT credit taken on the inputs during the month minus A; (iii) the amount attributable to input services used in or in relation to relation to manufacture of exempted goods or provision of exempted service (provisional) = (B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of taxable services provided plus the total value of exempted services and rem....

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....f exempt goods, they had maintained separate accounts without availing ineligible credits. However, under the erroneous belief that abatement of liability devolving on them on reverse charge for availment of "goods transport agency service" and other similar services was 'exempted service' within the meaning of rule 2( c) of CENVAT Credit Rules, 2004, they, in accordance with sub-clause (b) and (c) of rule 6(3A) of the CENVAT Credit Rules, 2004 discharged liability. The jurisdictional Central Excise authorities held that they were not in the business of providing any exempt services rendering application of sub-clause (b) of rule 6(3A) of CENVAT Credit Rules, 2004 inoperable and, therefore, precludes them from exercise of the option in rule....