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TMI Blog2014 (10) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... goods and also provider of services. They also undertook trading activities which is an exempted service. During April 2011 to March 2012, the appellant availed Cenvat Credit amounting to Rs. 1,80,44,714/- in respect of services which were solely used in the manufacture of excisable goods. Similarly, they availed input service credit in respect of services solely used in rendering of taxable output services amounting to Rs. 18,87,88,934/-. They also availed input service credit in respect common input service used in the manufacture of dutiable goods, taxable output services and exempted output services amounting to Rs. 2,07,66,032/- as they were not able to maintain separate records. Therefore, a show-cause notice was issued to the appellant vide notice dated 27/05/2013 wherein it was proposed that the appellant is liable to reverse Cenvat credit amounting to Rs. 8,62,06,300/- in respect of common input services taken during April 2011 to March 2012 in terms of Rule 6(3A) (c) (iii) read with Rule 14 of the Cenvat Credit Rules, 2004, further read with Section 11A of the Central Excise Act, by applying the formula prescribed under the said Rule. The said notice was adjudicated by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id formula, the amount attributable to input services used in or in relation to the manufacture of exempted goods or provision of exempted services, would be equal to (M/N) multiplied by "P" where "M" denoted the total value of exempted services provided plus the total value of dutiable and exempted goods manufactured and removed during the financial year. "N" denotes the total value of taxable and exempted services provided and total value of dutiable and exempted and removed and "P" denotes the "total Cenvat Credit taken on input services during the financial year". Therefore, the total Cenvat Credit taken on input services has to be taken into account and not the Cenvat Credit taken on common input services as contended by the Counsel for the appellant. The Commissioner (AR) also points out that sub-rule (3) of Rule 6 starts with a non-obstante a clause namely, "notwithstanding anything contained in sub-rule (1) & (2)'; therefore, the provisions of sub-rule (3) would prevail over the provisions of sub-rule (1) & (2). As per the provisions of sub-rule (3), the assessee has an option either to pay an amount equal to 5% of the value of the exempted services or to pay an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture of exempted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional)= (B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of output services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A; (iii) the amount attributable to input services used in or in relation to manufacture of exempted goods and their clearance up to the place of removal or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of output and exempted services provided, and total value of dutiable and exempted goods manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hird factor is "P" which denotes the total Cenvat Credit taken on input services during the financial year. It should be noted that "P" denotes the total Cenvat Credit taken on input services during the financial year and not the total of the Cenvat Credit taken on common input services. This is also evident from other two factors, namely, "M", "N" which provides for taking into account, the total of the value of services provided and the total value of goods manufactured. The same principle applies in the case of determination of provisional credit required to be reversed every month. In this view of the matter, the confirmation of demand applying the formula provided in sub-rule (3A) of the Rule 6 by the adjudicating authority cannot be faulted at all. As regards the reliance placed by the appellant in the case of Sify Technologies Ltd. (supra), the same is only an interim order and does not lay down any ratio. Further in the said order, there is no reason given as to why only the value of Cenvat Credit taken on common input services should be taken when the Rules specifically provides for taking the total of the Cenvat Credit taken on input services. It is a well settled positio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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