TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 430
X X X X Extracts X X X X
X X X X Extracts X X X X
....-14 and 2014-15 that was excluded from levy of tax and for providing 'cargo handling agency' service on which liability was being duly discharged. 2. Having admitted that they had not been segregating the consumption for accounting of three 'input services', procured for both taxable and exempted activities, the controversy is not about the consequent liability but only about the quantum; the appellant has reversed credit of Rs.1,59,265, along with applicable interest, in discharge of obligation under rule 6(3)(ii) of CENVAT Credit Rules, 2004. However, the case of service tax authorities is that actual liability amounted to Rs.15,26,965 by operation of rule 6(3)(i) of CENVAT Credit Rules, 2004. 3. Relying upon the decision of the Tribuna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to their detriment merely for having adopted another prescribed formula for reversal. 4. It was further contended that the Tribunal, in Arcadia Shipping Ltd v. Commissioner of CGST & Central Excise, Mumbai [2019- TIOL-2124-CESTAT-MUM], had interpreted rule 2(e) of CENVAT Credit Rules, 2004 to exclude 'ocean freight' from coverage therein and, thereby, precluded the consequence of rule 6 of CENVAT Credit Rules, 2004 on this service. Relying on the decision of the Tribunal in Commissioner of Central Excise & Service Tax, Rajkot v. Reliance Industries Ltd [2019-TIOL-1593-CESTAT-AHM] holding that '8. From the reading of Rule 6(1), it is clear that only in respect of input or input service used in exempted goods are not allowed. That ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....slators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/ input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub Rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-Rule (3A) shall have retrospective effect being clarificatory.' it is contended that the application of an irrelevant formula among the several prescribed in rule 6 of CENVAT Credit Rules, 2004 should not be sustained and that amendment of rule 6 (3A) of CENVAT Credit Rules, 2004 in April 2016 has retrosp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated 28/03/2018 wherein the learned Commissioner have dropped the proceedings following the ruling of this Tribunal in IBM India (Pvt.) Ltd. (supra). Particularly mentioning in para 25.5, that this order in IBM of this Tribunal have been accepted in review by the Department on 03/07/2015. Learned Commissioner also took notice of the Notification No. 13/2016 dated 01/03/2016 where Rule 6 of Cenvat Credit Rules was re-drafted, particularly Rule 6(iii) which is as follows: "(i) No credit of inputs or input services used exclusively in manufacture of exempted goods or for provision of exempted services shall be available; (ii) Full credit of input or input services used exclusively in final products excluding exempted goods or output servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....016, to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal. 20. Such amendment was also clarified by the Tax Research Unit Circular dated February 29, 2016 to apply retrospectively inasmuch as the clarification clearly mentions that the provisions of Rule 6 providing for reversal of credit in respect of input services used in exempted services, is being redrafted with the objective to simplify and rationalize the same without altering the established principles of reversal of such credit. It has been further clarified at paragraph (iv) of the Circular that the purpose of the rule is to deny credit of such part of the total credit taken, as is attributable to the exem....