AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 812
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....6 of Cenvat Credit Rules, 2004. The appellant did not avail any Cenvat credit of duty/ tax paid on input and input services exclusively used by it in respect of generation LPG and SKO. The dispute in the present case pertains to reversal of Cenvat credit under Rule 6 (3 ) read with Rule 6 (3A) of Cenvat Credit Rules, 2004 i.e. whether such reversal ought to be computed on total credit or common credit. Rule 6 (3) places an obligation on the assessee for reversal of Cenvat credit on inputs and input services used for manufacturing of exempted goods. The case of the appellant is that the respondent has wrongly interpreted Rule 6 (3) and Rule 6 (3A) of Cenvat Credit Rules, in such a way wherein he has computed the reversal on total Cenvat credit availed on inputs and input services pertaining to dutiable as well as exempted supplies and not on the common credit of input and input services used for manufacture of both dutiable and exempted good. 2. Ms. Dimple Gohil, Learned Counsel appearing on behalf of the Appellant submitted a synopsis and reiterated the same. She further submits that the issue in the appellant's own case is no more res-integra as the same has been decided vide F....
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....the purpose of formula for calculation of such amount whether total Cenvat credit of all the inputs and input service is to be taken or only total Cenvat credit of common input and input service used in dutiable and exempted goods has to be taken. On this issue due to serious confusion that whether the total Cenvat credit has to be taken or only total Cenvat credit of common input and input service used in dutiable and exempted goods has to be taken for the purpose of formula under Rule 6 (3A). An amendment was brought by substitution vide Notification No. 13/2016-CE(NT) dated 01.03.2016 whereby it was clarified that the total Cenvat credit means the credit availed on common inputs and input services used in the manufacture of dutiable as well as exempted goods. 4.2 Considering the above changes and interpretation of the term "total cenvat credit" for the purpose of Rule 6 (3A) this Tribunal in the appellant's own case passed the Final Order No. A/10642/2024 dated 20.03.2024. The said order is extracted below:- "4. The issue that arises for consideration in this appeal is regarding the manner of computation of proportionate reversal of credit determined under Rule 6(3A)....
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....e 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. Explanation I. - 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. Explanation II. - For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs used exclusively in or in relation to the manufacture of exempted goods or for provision of exempted services and on input services used exclusively in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services. Explanation III. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. (3A) For dete....
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....ing Cenvat credit on input and input services used for exempted goods. This clearly means that credit is allowed to be taken only on Input and Input services pertaining to dutiable goods. The dispute in the appeal is regarding the interpretation of the term total Cenvat credit provided in the formula in Rule 6(3A)(b)(ii). It would be clear from a conjoint reading of sub-rules 6(1), (2) and (3) of Rule 6 that the total Cenvat credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input and input service and cannot include Cenvat credit on input and 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 and 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. 4.3 We noticed that 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....
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.... called common credit, denoted as C and calculated as, - C = T - (A + B); Explanation. - Where the entire credit has been attributed under sub-clauses (i) and (ii), namely ineligible credit or eligible credit, there shall be left no common credit for further 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 dee....
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.... imposed. Only an obvious mistake was sought to be removed thereby." As per this interpretation of the Hon'ble Supreme Court, the sub-rule (3A) being substitution shall have a retrospective effect and will be applicable for all time since when the Rule was enacted. Therefore, for this reason also, for the purpose of calculation of Cenvat credit reversal, in the formula, total Cenvat credit shall mean credit of only common input and input service and not of input and input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the appellant in its entirety. 4.5 We also find that the as regard to availment of Cenvat credit on inputs and input services used for manufacture of LPG & SKO, the issue is no more res integra in view of the Hon'ble High Court of Gujarat decision in the case of M/s Reliance Industries Ltd. 2022(382)ELT 53 (Guj), wherein the Hon'ble High Court has held that LPG is a by product generated in the process of refining and no reversal is required in this matter. We also find that the said disputed issue are also decided in favour of the assessee in the matter of Reliance Industries Ltd. [2023-TIOL-1130-HC-....