2018 (5) TMI 770 - AT - Central Excise

CENVAT credit - appellant is manufacturing both dutiable, as well as, exempted excisable goods - Rule 6 of CCR - Held that - It is an admitted fact on record that the appellant had exported the business auxiliary service and availed the service tax exemptions for such exportation - Sub-rule (7) of Rule 6 of the Cenvat Credit Rules was inserted with effect from 01.07.2012, providing for non-inclusion of the value of service, which was exported. Since the authorities below have not specifically discussed the applicability of sub-rule (7) of Rule 6 of the Cenvat Rules to the facts and the circumstances of the present case, the matter should go back to the original authority for a proper fact finding - appeal allowed by way of remand.

Summary

Issues:
- Interpretation of Rule 6 of the Cenvat Credit Rules regarding the computation of cenvat credit.
- Applicability of sub-rule (7) of Rule 6 for non-inclusion of the value of exported service in cenvat credit computation.

Analysis:
Issue 1: The appellant was manufacturing dutiable and exempted excisable goods while also providing exempted business auxiliary services. The appellant followed the procedure under sub-rule (3A) of Rule 6 of the Cenvat Credit Rules for cenvat credit utilization. However, the Department disagreed with the computation method, leading to a confirmed cenvat credit demand against the appellant.

Issue 2: The appellant argued that since the business auxiliary service was exported, it should fall under sub-rule (7) of Rule 6, which excludes the exported service value from cenvat credit computation. The Revenue, on the other hand, supported the findings of the impugned order.

The Tribunal observed that the appellant indeed exported the business auxiliary service and availed service tax exemptions for such exports. Sub-rule (7) of Rule 6, inserted from 01.07.2012, specifically addresses the non-inclusion of exported service value. However, the computation by the authorities included the export service value, resulting in a confirmed differential cenvat credit against the appellant. As the authorities did not discuss the applicability of sub-rule (7) to the case, the matter was remanded for a proper fact-finding on whether the rule should apply to the appellant's situation for excluding the export service value from the service tax liability computation.

Therefore, the Tribunal set aside the impugned orders and remanded the matters to the original authorities for a detailed fact-finding based on the observations made. The appeals were allowed by way of remand, emphasizing the need for a proper examination of the applicability of sub-rule (7) of Rule 6 to determine the cenvat credit computation accurately.