TaxTMI 
TaxTMI 
2025 (11) TMI 130
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....2. At para 16 of that order, the Adjudicating Authority has framed the issues for adjudication numbered (i) to (v). In the Memorandum of Appeal before us, the Appellant avers that it is not aggrieved by the Adjudicating Authority's decisions in respect of issues (i) and (ii). Issues (iv) and (v) relate to interest under Rule 14 of the CENVAT Credit Rules, 2004 and penalty under Rule 15(1) thereof. These issues are consequential. Therefore, issue (iii) merits consideration first. This issue relates to the manner of reversal of CENVAT credit attributable to exempted goods/services. 3. The Appellant provides various taxable services and avails CENVAT credit of Service Tax paid on various input services under the CENVAT Credit Rules, 200....
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....procedure prescribed by sub-rule (2) was not correct, and that the Appellant was liable to pay amounts only as per sub-rule (3A). The Appellant responded that it was never its case that sub-rule (2) applied and that it was only following sub-rule (3A). 7. By the impugned order, the Adjudicating Authority found that the Appellant had opted for the method prescribed in Rule 6(3)(ii), i.e., computing and paying an amount in the manner prescribed by Rule 6(3A). He then observed that sub-rule (3A) contemplates three factors. The third of these factors, he notes, is "P" which is the total CENVAT credit taken on input services. He records the Appellant's contention that the amount of reversal was to be determined only with reference to comm....
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....nly sub-clause (iii) is relevant. The relevant portions of sub-clause (iii), as they stood before such amendment, read as follows: "(c) the manufacturer of goods or the provider of output service, shall determine finally the amount of CENVAT credit attributable to exempted goods and exempted services for the whole of the financial year in the following manner, namely:- ... ... (iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services = (M/N) multiplied by P, where M denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the financial year, N denotes total value of ....
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.... eligible credit and denoted as B (Annual); (iii) common credit left for further attribution shall be denoted as C (Annual) and calculated as,- C (Annual) = T (Annual) - [A (Annual) B (Annual); (iv) common credit attributable towards exempted goods removed or for provision of exempted services shall be called Annual ineligible common credit, denoted by D (Annual) and shall be calculated as,- D (Annual) = (H/I) C(Annual); where H is sum total of- (a) value of exempted services provided, and (b) value of exempted goods removed during the financial year; where I is sum total of- (a) value of non-exempted services provided, (b) value of exempted services provided, ....
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....n though used in the manufacturer of duty goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004." 16. This Tribunal then went on the hold that when this anomaly was noticed, the sub-rule (3A) was substituted with the "intention to give a clarificatory nature to the provision of Sub-Rule (3A) so as to make it applicable retrospectively." This Tribunal held that "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... Therefore, the substituted provision of sub-rule (3A) shall have retrospective effect being clarificatory." 17. Reliance Industries has been followed by another Co-ordinate Bench in the....