TaxTMI 
TaxTMI 
2020 (3) TMI 307
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....he Commissioner (Appeals), appellant is before this forum. 2.1 Shri M.N. Bharathi, Learned Advocate, appeared for the appellant and submitted that the issue to be decided is whether calculation of cenvat credit to be reversed in cases of inputs or input services attributable to both exempted goods/exempted services and dutiable goods and taxable services, the total credit that should be taken for calculation in terms of Cenvat Credit Rule 6 (3A) should be restricted to only common inputs or common input services only? 2.2 According to the Learned Commissioner (Appeals) Rule 6 (3A) clearly states that it is total Cenvat credit taken on input services and the appellant has taken into account only the common input services and hence confirmed recovery of the short payment of Rs. 13,96,785/-. Learned Advocate further submitted that the appellant's case is covered by the decision of the Ahmedabad Tribunal in the case of Commissioner of Central Excise & ST, Rajkot Vs. Reliance Industries Ltd. - 2019 (28) GSTL 96 (Tri.-Ahmd.), wherein it had been held that nowhere in Rule 6 it is provided that the input or input service used in dutiable goods shall not be allowed. The Revenue is onl....
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.... or in relation to manufacture of dutiable final product. As per Rule 6(3), the manufacturer opting not to maintain separate accounts, can opt to pay an amount in terms of the formula prescribed in sub-rule (3A). He submits that in so far as the common input/input service is concerned, Rule 6 envisages that the same shall be apportioned on the basis of turnover of dutiable and exempted goods. It is in this context that the expression "total Cenvat credit taken" used in Rule 6(3A)(c)(iii) refers to the total Cenvat credit on common input services alone and not the total Cenvat credit on all input services. 7. We have carefully considered the submissions made by both the sides and perused the record. The limited issue to be decided in this case is that for the purpose of calculating the Cenvat credit for reversal in terms of Rule 6(3A) as per of formula given therein, whether the total Cenvat credit means it is including the Cenvat credit of input services exclusively used for dutiable product should be taken or total Cenvat credit of only common input service should be taken. Before proceeding, it is necessary to read the relevant Rule 6(1), (2) and (3) pre- and post-amendm....
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....all follow any one of the following options, as applicable to him, namely :- (i) pay an amount equal to six per cent. of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in clause (a) of sub-rule (2), take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of said clause (a) and pay an amount as determined under sub-rule (3A) in respect of input services. The provisions of sub-clauses (i) and (ii) of clause (b) and sub-clauses (i) and (ii) of clause (c) of sub-rule (3A) shall not apply for such payment : Provided that if any duty of excise is paid on the exempted goods, the same shall he reduced from the amount payable under clause (i) : Provided further that if any part of the value of a taxable, service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be six per cent. of the value so exempted : Provided also that in ca....
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....utput service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description of dutiable goods or output services; (iv) description of exempted goods or exempted services, (v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition; (b) the manufacturer of goods or the provider of output service shall, determine and pay provisionally, for every month, - (i) the amount equivalent to CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (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 output services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A; (iii) ....
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.... (c) and the aggregate amount determined and paid as per condition (b), on or before the 30th June of the succeeding financial year, where the amount determined as per condition (c) is more than the amount paid; (e) the manufacturer of goods or the provider of output service, shall, in addition to the amount short-paid, be liable to pay interest at the rate of twenty-four per cent. per annum from the due date, i.e., 30th June till the date of payment, where the amount short-paid is not paid within the said due date; (f) where the amount determined as per condition (c) is less than the amount determined and paid as per condition (b), the said manufacturer of goods or the provider of output service may adjust the excess amount on his own, by taking credit of such amount; (g) the manufacturer of goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of payment or adjustment, as per conditions (d) and (f) respectively, the following particulars, namely :- (i) details of CENVAT credit attributable to exempted goods and exempted services, monthwise, fo....
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....e Revenue is only interpreting the term "total Cenvat credit" provided under the formula. If the whole Rule 6(1), (2) and (3) is read harmoniously and conjointly, it is clear that "Total Cenvat Credit" for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input service and will not include the Cenvat credit on input/input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. 9. An amendment made in Rule 6(3A) by Notification No. 13/2016-C.E. (N.T.), dated 1-3-2016. The amended sub-rule (3A) of Rule 6 of Cenvat Credit Rules, 2004 is reproduced below :- Sub-rule (3A) as per Notification No. 13/2016-C.E. (N.T.), dated 1 Mar., 2016 (d) for sub-rule (3A), the following sub-rule shall be substituted, namely :- "(3A) For determination of amount required to be paid under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow....
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....rther attribution; (iv) the amount of common credit attributable towards exempted goods removed or for provision of exempted services shall be called ineligible common credit, denoted as D and calculated as follows and shall be paid, - D = (E/F) x C; where E is the sum total of - (a) value of exempted services provided; and (b) value of exempted goods removed, during the preceding financial year; where F is the sum total of - (a) value of non-exempted services provided, (b) value of exempted services provided, (c) value of non-exempted goods removed, and (d) value of exempted goods removed, during the preceding financial year : Provided that where no final products were manufactured or no output service was provided in the preceding financial year, the CENVAT credit attributable to ineligible common credit shall be deemed to be fifty per cent. of the common credit; (v) remainder of the common credit shall be called eligible common credit and denoted as G, where, - G = C - D. Explanation. - For the removal of doubts, it is hereby declared that out of the tota....