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TMI Blog2014 (7) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... dit. In the absence of maintenance of separate accounts, the credit on input services was clearly not eligible. In fact, the Department could have demanded the amount payable as per Rule 6(3) of CCR. However, they have chosen to demand only proportionate credit. Therefore the consideration also is limited to the question as to when input service tax credit has been taken, provisions of Rule 6 regarding the availability of credit was attracted or not. Rule 6(1) clearly denies CENVAT credit in respect of exempted products. In the absence of any specific provisions, the appellant is bound to reverse the credit taken. Rule 6(5) services - Held that:- At this stage, the learned counsel made another submission that there were services which are among the 17 services listed in Rule 6(5) and in respect of these services credit can be taken even if they are used in dutiable and exempted products. She submitted that the amount attributable to these services is ₹ 10, 361/-. - Contention of assessee is correct - therefore the payable amount to be demanded has to be reduced by this amount. Extended period of limitation - whether the similar matter was under consideration of the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e verified from the records, it is observed the assessee is not availing the credit on inputs. However it is found that they avail the credit on Capital Goods and Input Services. 4. It is mentioned here that the IAP which has visited the unit during 12/2007 had observed that, as the assessee was availing credit on input services, and as input and input services are parallel, the benefit of Exemption Notification No.30/2004 cannot be extended. The IAP has raised an objection (pars) for a sum of ₹ 8.24 Lakhs covering the period from 9/2006 to 12/2007. 5. Further, it is mentioned here that, a similar objection was raised earlier in respect of the clearances of Glazed Tiles also. The issue was finally decided by the Commissioner (A) vide OIA.No.34/2008-CE dt.27.2.2008 and the benefit was allowed. It was held therein that, no parallel can be drawn between input credit and input services as these are governed by two different set of Rules. The OIA was accepted in review on 5.5.2008. 6. Now, for the instant case of Flat Bed Screens the same analogy was adopted, and after due examination the Audit objection was treated as closed on 18.8.2008. 7. In view of all the foregoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (vi) Canteen Services etc. These services are commonly being utilized for the manufacture and clearance of dutiable as well as exempted goods, and no separate accounts for receipt, consumption etc. meant for use in the manufacture of dutiable and exempted goods are maintained. The assessee vide their letter dt.29.4.2008 addressed to the Range Officer has exercised an option to opt for Sub-rule 3(ii) under Rule 6 of CCR 2004. 11. In view of the above the audit was of the opinion that, (i) for the period prior to 1.4.2008, the assessee has to pay an amount equivalent to the CENVAT credit attributable to the input services used in the manufacture of exempted goods. Secondly, (ii) for the period w.e.f 1.4.2008, the assessee has to pay an amount provisionally on a monthly basis as detailed below; Amt Payable every month = E/F*G Where E= Total value of Exempted goods manufactured and cleared during the preceding Financial Year F= Total value of dutiable and exempted goods during the preceding Financial year G= Cenvat credit taken on the input services during the [Sub-Rule 3(A) (b) under Rule6 of CCR'2004 refers) month. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AR on the other hand submits that the provisions of Rule 3 would not be applicable to the situation here and in view of the provisions of Rule 6, the appellant would not have availed the benefit of credit of service tax paid on input services in respect exempted products. 16. I have considered the submissions made by both the sides. As regards application of explanation to Rule 3(7) of CCR, I find that the rule is applicable. The rule would not have been applicable if the Notification was to provide that the exemption would be available if input service was mentioned in the notification. If there is an exemption available to a finished goods in spite of the fact that credit has been availed and if the notification specifically provides that CENVAT credit even if it is taken benefit would be available the provisions of Rule 3 may be attracted. In a case where the exemption is denied if the credit is availed and the notification nowhere mentions input service, provisions of explanation would not be attracted. Therefore, I am unable to consider this submission 17. Coming to the provisions of Rule 6, it is quite clear that credit can be taken only if separate accounts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by them and they were required to follow procedures. In spite of this, the appellant chose to wait for proceedings to be initiated by the Revenue for recovery of the wrongly availed service tax credit and the matter has gone right up to this Tribunal. Under these circumstances, I consider that the claim that there was no suppression or misdeclaration cannot be considered. When the appellant did not reverse the proportionate credit or pay the amount as prescribed under Rule 6(3) or did not implement the option exercised by themselves, there is a clear misdeclaration or suppression on their part and therefore I do not find any merit as regards the submission relating to invocation of extended period or suppression of facts. In any case, since penalty has not been imposed equal to service tax and only ₹ 10,000/- has been imposed, I find that there is no need to disturb this penalty also. In the result, the appeal is rejected but for relief to the extent of ₹ 10,351/- being the service tax credit attributable to services which are permitted to be used in respect of which service tax credit can be taken when they are used in dutiable and exempted products by the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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