TaxTMI 
TaxTMI 
2024 (5) TMI 70
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....ding activities. The respondent had neither maintained separate inventory nor had opted in terms of Rule 6(2) of CENVAT Credit Rule (CCR), 2004. In terms of provisions of Rule 6(3)(i) of CENVAT Credit Rules, 2004 wherever an assessee avails cenvat credit on common input services which are used for both taxable and exempted services shall pay an amount equal to 5% /6% of value of the exempted goods/services. Accordingly, Rs.2,84,71,485/- was demanded in terms of Rule 14 of CCR, 2004 read with Section 73(1) of the Finance Act, 1994 along with interest under Section 75 of Finance Act, 1994. The Commissioner in the impugned Order observed that for the period 2011-2012 and 2012-13, the respondents were predominantly engaged in the provision of taxable services mainly exports and the trading activity was minimal. He also states that most of the impugned services were utilized for taxable services/exports and not for trading activity. The respondent, therefore, taking into account the proportionate credit, reversed sum of Rs.1,14,64,277/- on 26.04.2016 as per the procedure laid down under 6(3)(ii) read with Rules 6(3A). The Commissioner held that Rule 6(3) provides 3 options and it is upt....
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.... the amount specified in clause (i) shall be [(seven percent)] of the value so exempted.] 3.1. It is further submitted that having not exercised option in writing before the jurisdictional officer, under Rule 6(3)(ii) respondent is bound to pay an amount equal to 5%/6% of the value of the exempted services. The CESTAT has overlooked the fact that as per Explanation-I under Rule 6(3) of the CCR, 2004 if the manufacturer of goods or the provider of exempted services, avails any of the option under sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the Financial Year. In the preset case, it is not in dispute that the assesse-respondent had not exercised such an option, therefore, the Rules are mandatory and are required to be followed scrupulously and the question of reversing proportionate credit does not arise. They relied on the decision of the Hon'ble Supreme Court in the case of Mangalore Chemicals and Fertilizers Ltd vs. Deputy Commissioner: 1991 (55) ELT 437 (SC). It is also submitted that the case relied upon by t....
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...., shall follow any one of the following options applicable to him, namely: - (i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services subject to a maximum of the sum total of opening balance of the credit of input and input services available at the beginning of the period to which the payment relates and the credit of input and input services taken during that period; or] (ii) pay an amount as determined under sub-rule (3A): Emphasis applied Explanation 1. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. [(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 the following procedure and conditions, namely: - (a) the manufacturer of goods or the provider of output se....
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...., take credit of amount equal to difference between the total of the amount of the aggregate of ineligible credit and ineligible common credit paid during the whole year and the total of the amount of annual ineligible credit and annual ineligible common credit, namely, [{(A+D) aggregated for the whole year)} - {A(Annual) + D(Annual)}], where the former of the two amounts is greater than the later; (g) the manufacturer of the 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 the provisions of clauses (d), (e) and (f), the following particulars, namely: - (i) details of credit attributed towards eligible credit, ineligible credit, eligible common credit and ineligible common credit, month-wise, for the whole financial year, determined as per the provisions of clause (b); (ii) CENVAT credit annually attributed to eligible credit, ineligible credit, eligible common credit and ineligible common credit for the whole of financial year, determined as per the provisions of clause (c); (iii) amount determined and paid....
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....from. Be it noted that output services relating to advertising space booked by the petitioner in print media is exempted under Section 65(105) (zzzm) of the Finance Act, 1994, which defines 'taxable service' to mean any service provided to any person by any other person, in relation to sale of space or time for advertisement but does not include sale of space or advertisement in print media. The Cenvat Credit availed by the petitioner which is in controversy accounts for a sum of Rs. 17,15,489/- only. 7. Rule 6 of the Cenvat Credit Rules, 2004 deals with the obligations of a provider of taxable and exempted services. Rule 6(1) states that Cenvat Credit shall not be allowed on inputs/input services exclusively used for providing exempted services. Rule 6(2) provides that if inputs or input services are used for provision of output services which are chargeable to duty or tax as well as exempted services, then separate accounts are to be maintained for receipt, consumption and inventory of inputs and receipt and use of input services and the provider shall take credit only on inputs used for dutiable output services. Rule 6(3) of the Cenvat Credit Rules, 2004 is relevant for....
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....f such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. As rightly pointed out by Sri S. Ravi, Learned Senior Counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed Cenvat Credit of Rs. 17,15,489/-. 15. We may also note that in the event the petitioner was found to have availed Cenvat Credit wrongly, Rule 14 of the Cenvat Credit Rules, 2004 empowered the authorities to recover such credit which had been taken or utilised wrongly along with interest. However, the second respondent did not choose to exercise power under this Rule but relied upon Rule 6(3)(i) and made the choice of the option thereunder for the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner." 6.1 In the case of M/s. Rajasthan Prime Steel Processing Center Private Limited 2019 TOIL-1939-HC-RAJ-CX. in a simil....
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....ble for the benefit of reversing the proportionate credit only if it is done along with interest as per law. As per Rule 6(3) of the CCR, 2004 the appellant in the first place is not eligible to avail credit on exempted products. For the benefit of the taxpayers where common credit is availed on both dutiable and exempted goods/services, certain provisions are enabled for the convenience of the taxpayer to ensure that credit is taken only on the dutiable products/services. To ensure smooth implementation of these Rules a methodology is being adopted as is laid down at Rule 6(3A) of the CCR, 2004. Since the credit was not to be availed at all on exempted goods/services, having availed an option is given to reverse the same along with interest. Therefore, when in the first place the appellant is not at all eligible to avail credit the question of whether utilised or not does not arise. 7. In the present case, the Commissioner while allowing payment of proportionate credit as per Rule 6(3A), with regard to interest holds that interest is not liable to be paid since sufficient balance was available in their account. The Commissioner has failed to notice that Rule 6(3A) is only an op....