2020 (1) TMI 4 - AT - Central Excise

CENVAT Credit - common input services used for taxable as well as exempt goods - appellant s contention is that they have not availed the CENVAT Credit on the entire amount of common input services but have availed CENVAT Credit only proportionate to the value of the excisable goods cleared and taxable services rendered - whether in terms of Rule 6 of CCR 2004 as applicable during the relevant period, the appellant could take proportionate amount of CENVAT Credit on the common input services, utilising relative turnover of the dutiable goods and taxable services to the total turnover and whether it can be considered as compliance in terms of Rule 6(2) of CCR 2004? HELD THAT - This issue was earlier discussed by this Bench with respect to the same appellant in the case of SHAKTI HORMANN PVT. LTD. VERSUS CCT, CE ST, MEDCHAL GST 2018 (12) TMI 426 - CESTAT HYDERABAD and it came to the conclusion that the appellant is covered by Rule 6(2) of CCR 2004 and therefore need not reverse any amount under Rule 6(3A). Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Interpretation of Rule 6 of the CENVAT Credit Rules, 2004 regarding availing CENVAT credit on common input services for manufacturing excisable goods, providing taxable services, and exempted services.

Detailed Analysis:

Issue 1: Interpretation of Rule 6 of CCR 2004
The appellant, engaged in manufacturing steel doors and trading parts, availed CENVAT credit on common input services for manufacturing excisable goods, providing taxable services, and exempted services. The Revenue argued that the appellant should reverse the CENVAT credit as per Rule 6(3) read with Rule 6(3A) of CENVAT Credit Rules, 2004. The appellant contended that they availed CENVAT credit proportionate to the value of excisable goods and taxable services, complying with Rule 6(2) of CCR 2004. The Tribunal analyzed the provisions of Rule 6(1) and Rule 6(2) of CCR 2004, emphasizing the requirement to maintain separate accounts for input and input services used in dutiable goods or taxable services. The Tribunal found that the appellant's method of availing CENVAT credit only on the amount attributable to taxable services complied with Rule 6(2) and did not require reversal under Rule 6(3A.

Issue 2: Application of Judicial Precedents
The Tribunal referred to previous decisions involving similar issues. In the case of Trans Asian Shipping Services Pvt. Ltd., the Tribunal held that maintaining separate records for credit availed on taxable services and exempted services fulfills the requirements of CENVAT Credit Rules. Similarly, in the case of Sify Technologies Limited, the Tribunal emphasized the importance of proportionality in allocating CENVAT credit and remitted the matter for further examination to ensure rational allocation. The Tribunal applied the principles established in these cases to the current appeal, concluding that the impugned order was unsustainable and set it aside.

Issue 3: Invocation of Extended Period
Regarding the question of invoking the extended period for assessment, the Tribunal considered the argument that regular audits conducted on the appellant's records negated any allegation of misstatement or suppression of facts. Citing the judgment in Sanjay Automobile Engineering Pvt. Ltd., the Tribunal held that when audits are conducted at regular intervals, there is no basis for alleging misstatement or suppression of facts. As audits were regularly conducted on the appellant's records, the Tribunal found no grounds for invoking the extended period, and the appellant succeeded on this aspect as well.

Conclusion:
The Tribunal allowed the appeal on both merits and limitation grounds, setting aside the impugned order. By following the established principles of Rule 6 interpretation and judicial precedents, the Tribunal ruled in favor of the appellant, emphasizing compliance with CENVAT Credit Rules and the absence of grounds for invoking the extended period for assessment.