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2019 (3) TMI 1773 - AT - Central ExciseCENVAT Credit - common input services for taxable as well as exempt service - non-maintenance of separate records - applicability of Rule 6 (3A) of Cenvat Credit Rules, 2004 or Rule 6(3)(a) of CCR - Valuation of subsidy disbursed - HELD THAT - The ld. Commissioner (Appeals) has failed to extend the benefit of provisions of Rule 6(3AA), under which an appellant is required to reverse only proportionate amount attributable to the exempted services of trading. Accordingly, the finding of the ld. Commissioner (Appeals) is set aside on this issue and the appellant is entitled to the benefit of the proportionate reversal with interest, as prescribed under 6 (3AA) of the Cenvat Credit Rules, for the period of dispute. Valuation - inclusion of subsidy granted by the Government of Rajasthan under the Industrial Promotion Scheme of the State in the form of vouchers in Form 37 B in the assessable value - amount was utilized in discharge of its VAT/Sales tax liability - HELD THAT - The said issue has been decided by the Division Bench of this Tribunal in favour of the appellant in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR 2018 (1) TMI 915 - CESTAT NEW DELHI where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant.
Issues:
1. Entitlement to benefit of reversal of proportionate credit under Rule 6 (3A) of Cenvat Credit Rules, 2004 with retrospective effect. 2. Liability to pay duty under Rule 6(3)(a) for maintaining a common account of cenvat credit for taxable goods and exempt services. 3. Central excise duty on subsidy granted under the 'Industrial Promotion Scheme of the State'. Analysis: Issue 1: Entitlement to benefit of reversal of proportionate credit under Rule 6 (3A) The appeal addressed the question of whether the appellant could avail the benefit of reversal of proportionate credit under Rule 6 (3A) of the Cenvat Credit Rules, 2004 with retrospective effect from 1.4.2016. The Tribunal found that the ld. Commissioner (Appeals) had erred by not extending the benefit of Rule 6(3AA), which requires reversing only the proportionate amount related to exempted services of trading. Consequently, the Tribunal set aside the Commissioner's finding and ruled in favor of the appellant, granting them the benefit of proportionate reversal with interest as prescribed under Rule 6 (3AA) for the disputed period. Issue 2: Liability for maintaining a common account of cenvat credit The second issue revolved around the liability of the appellant to pay duty under Rule 6(3)(a) for maintaining a common account of cenvat credit for manufacturing taxable goods and providing exempt services. The Tribunal's decision favored the appellant, acknowledging their entitlement to the benefit of proportionate reversal under Rule 6(3AA) specifically related to exempted trading services. This ruling overturned the decision of the ld. Commissioner (Appeals) and granted the appellant the benefit they sought. Issue 3: Central excise duty on subsidy granted under the 'Industrial Promotion Scheme of the State' Regarding the central excise duty on the subsidy granted by the Government of Rajasthan under the 'Industrial Promotion Scheme of the State', the Tribunal referred to a previous decision by the Division Bench in the case of Shree Cement, where it was held that the subsidy disbursed in the form of vouchers in 'Form 37 B' utilized by the appellant to discharge VAT/Sales tax liability would not form part of the transaction value. Consequently, this ground was allowed in favor of the appellant. In conclusion, the appeal was allowed, and the impugned order was modified to grant the appellant the benefits as indicated in the Tribunal's rulings. The appellant was entitled to consequential benefits as per the judgment delivered in open court.
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