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2024 (5) TMI 70 - CESTAT BANGALOREReversal of proportional CENVAT Credit - trading activity - exempt services - respondent had neither maintained separate inventory nor had opted in terms of Rule 6(2) of CENVAT Credit Rule (CCR), 2004 - HELD THAT:- If the manufacturer or provider of service had failed to exercise the option under sub-rule 6(3) of the CCR, 2004 will be allowed to pay the proportionate credit along with the interest at the rate of 15% per annum from the due date for payment of amount till the date of payment. Hence the appellant is eligible for the benefit of reversing the proportionate credit only if it is done along with interest as per law. As per Rule 6(3) of the CCR, 2004 the appellant in the first place is not eligible to avail credit on exempted products. For the benefit of the taxpayers where common credit is availed on both dutiable and exempted goods/services, certain provisions are enabled for the convenience of the taxpayer to ensure that credit is taken only on the dutiable products/services. In the present case, the Commissioner while allowing payment of proportionate credit as per Rule 6(3A), with regard to interest holds that interest is not liable to be paid since sufficient balance was available in their account. The Commissioner has failed to notice that Rule 6(3A) is only an option given to the appellant allowing reversal of credit at a later date only if it is paid along with interest. The reliance placed by the Commissioner on the decision of the Hon’ble High court of Karnataka in the case of CCE, ST & LTU Bangalore vs Bill force Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] is misplaced since the facts of that case was excess availment of credit which was unutilized and reversed. The present case is clearly distinguishable as it is allowing the option of proportionate reversal of credit provided the reversal happens along with interest. The Commissioner’s order with regard to confirmation of service tax demand of Rs.1,14,64,277/- upheld - Revenue’s appeal with regard to demand of interest is upheld - interest is to be paid on the above demand of Rs.1,14,64,277/- in terms of Rule 6(3A) of the Cenvat Credit Rules, 2004. Revenue’s Appeal is allowed only to the extent of demand of interest.
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