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TMI Blog2016 (1) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... xable service is contrary to the principal of proportionality. Therefore, entire disallowance does not call for any decision in favour of Revenue. As an abundant caution, to make sure that the mathematical exercise is properly made by the appellant for allocation of credit rationally, the matter is remitted to the Adjudicating Authority to a limited extent to examine the allocation of the credit received by the appellant through departments in Table-C and allocable to departments in Table-A in the manner the appellant has carried out. Appellant's averment that the credit of ₹ 6,66,423/- allocated to the department in Table-B is reversed needs to be examined. - Matter remanded back for limited purpose - Decided in favor of assessee. - Appeal No.ST/645/2010 - Final Order No.40058/2016 - Dated:- 8-1-2016 - SHRI D.N. PANDA, JUDICIAL MEMBER AND SHRI R. PERIASAMI, TECHNICAL MEMBER For the Petitioner : Shri Raghavan Ramabadran, Advocate For the Respondent : Shri K. Veerabadhra Reddy, JC (AR) ORDER PER D.N. PANDA The precise question that has been raised in this appeal is whether the cenvat credit of service tax paid on input services availed by service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-A and Table-B. 4. Appellant submits that so far as the extent of input service credit earned by Table-C departments is concerned when that was allocated to the departments in Table-A that has been questioned by the Revenue on the ground that part of the input credit of departments in Table-C was also allocated to department in Table-B. Appellant is not entitled to the cenvat credit claimed by it since Table-B department provide exempted service. Appellant explains that the input credit earned by the departments in Table-C was allocated to the Departments in Table-A B on the ratio of the turnover. However, the cenvat credit allocated to the Departments-C was reversed which is undeniable as is apparent from para-12 of the adjudication order. 5. On the aforesaid factual premise, appellant's submission is that when the records clearly demarcated the extent of credit allocable to departments in Table-A and Table-B that ought to have been verified by the Revenue before questioning. But that was not done. Entire cenvat credit earned genuinely by Departments in Table-C were disallowed without bringing any cogent evidence to demonstrate that those services were not relevant. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A) Explanation I. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation II.- For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service. (3A) For determination and payment of amount payable under cause (ii) of sub-rule (3), the manufacture of goods or the provider of output service shall follow the following procedure and conditions, namely:- (a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of CENVAT credit attributable to inputs used for provision of exempted services = (J/K) multiplied by L, where J denotes the total value of exempted services provided during the financial year, K denotes the total value of dutiable goods manufactured and removed plus the total value of taxable services provided plus the total value of exempted services provided, during the financial year and L denotes total CENVAT credit taken on inputs during the financial year minus H; (iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services = (M/N) multiplied by P, where L denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the financial year, M denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the financial year, and N denotes total CENVAT credit taken on input services during the financial year; (d) the manufacturer of goods or the provider of output service, shall pay an amount equal to the difference between the aggregate amount de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeding financial year. (i) where the amount determined under condition (h) is not paid within the said due date, i.e., the 30th June, the manufacturer of goods or the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty four per cent per annum from the due date till the date of payment. Explanation I. - Value for the purpose of sub-rules (3) and (3A) shall have the same meaning assigned to it under section 67 of the Finance Act, 1994 read with rules made thereunder or, as the case may be, the value determined under section 4 or 4A of the Central Excise Act, 1944 read with rules made thereunder. Explanation II. - The amount mentioned in sub-rules (3) and (3A), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENV AT credit or otherwise on or before the 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March. Explanation III. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable for the reason that as against credit of ₹ 6,66,423/- allocated to the department in Table-B which provided exempted service, disallowance of entire credit of ₹ 1,11,07,075/- allocated to Departments in Table-A providing taxable service is contrary to the principal of proportionality. Therefore, entire disallowance does not call for any decision in favour of Revenue. 10. As an abundant caution, to make sure that the mathematical exercise is properly made by the appellant for allocation of credit rationally, the matter is remitted to the Adjudicating Authority to a limited extent to examine the allocation of the credit received by the appellant through departments in Table-C and allocable to departments in Table-A in the manner the appellant has carried out. Appellant's averment that the credit of ₹ 6,66,423/- allocated to the department in Table-B is reversed needs to be examined. 11. With the aforesaid direction, the appeal is remanded to the adjudicating authority to complete the mathematical exercise and verification within a month of receipt of this order and upon issuing notice to appellant as well as granting reasonable opportunity of he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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