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TMI Blog2021 (2) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... said amendment, the Government of India vide DOF No. 334/8/2016-TRU dated February 29, 2016 clarified that Rule 6 of Cenvat Credit Rules which provides for reversal of credit in respect of inputs and input services used in manufacture of exempted goods or for provision of exempted services, is being redrafted with the objective of simplifying and rationalizing the same without altering the established principles of reversal of such credit. Thus, it is apparent that the amendment made is of clarificatory nature and the principles of reversal of credit remains the same. In the instant case, it is seen that Rule 6 of CENVAT Credit Rules, 2004 deals solely with the situation of CENVAT Credit resulting from exempted services and exempted products. The rule itself is clearly designed to deny partial credit of CENVAT credit taken on inputs/input services used in exempted goods and services. The CENVAT credit of other kind has no relevance in this rule. In these circumstances, it is obvious that reference to CENVAT Credit in the said Rule would be reference to CENVAT Credit on common input services which are used for exempted products and services as well as for dutiable products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NVAT credit attributable to inputs used for provision of exempted services = (J/K) multiplied by I, where J denones 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 [and their clearance upto the place of removal] or provision of exempted services = (M/n) multiplied by P, where (M) denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the financial year. [N] denotes goods manufactured and removed, during the financial year, and [P] denotes total CENVAT Credit taken on input services during the financial year; 3. He pointed out that the term P in the aforementioned formula was taken to be the service tax attributable only to the common service used for both taxable and exempted activities. 4. Learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no scope for intendment in law. Learned Authorised Representative relied on the decision of Apex Court in the case of L R. BROTHERS INDO FLOORA LTD. VS. COMMISSIONER OF CENTRAL EXCISE [2020 (373) ELT 721 (SC)] to assert that the amendment made in law cannot be applied retrospectively. 8. Learned Authorised Representative relied on the decision of Hon ble Apex Court in the case of Union of India versus Deoki Nandan Agarwal [AIR 1992 SC 96] to assert that it is not duty of the Court to either enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. He argued that Court cannot re-write , recast or reframe the legislation for the reason that it has no power to legislate. He argued that Court cannot add words to a statute or read words into it which are not there. 9. Learned Authorised Representative argued that provisions of law are very clear and Rule 6(3A) uses the words total CENVAT Credit taken on input services during the financial year . He argued that it is not proper for Tribunal to change the meaning of the aforementioned expression and to restrict it to common inputs. 10. We have go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services- (i) in or in relation to the manufacture of exempted goods and their clearance up to the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance upto the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b).] (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow [any one] of the following options, as applicable to him, namely:- (i) pay an amount equal to [six] percent of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub-rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial 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. Explanation III-No CENVAT credit shall be taken on the duty or tax paid on any good and services that are not inputs or input services.] (3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer 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 Excise giving the following particulars, namely:- (i) name, address and registration No. of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to exercised; (iii) description of dutiable goods or output services; (iv) description of exempted goods or exempted services, (v) CENVAT credit of inputs and input services lying in balance as on the date of exercising ..... 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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 and their clearance up to the place of removal or provision of exempted services = (M/N) multiplied by P, where M 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 output 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 determined as per condition (c) and the aggregate amount determined and paid as per condition (b), on or before the 30th June of the succeeding financial year, where the amount determined as per condition (c) is more than the amount paid; (e) the manufacturer of goods or the provider of output service, shall, in addition to the amount short-paid, be liable to pay interest at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in respect of input or input service used in exempted goods are not allowed. That means input or input service used in taxable service/dutiable goods, Cenvat credit is allowed. Sub-rule (2) of Rule 6 is only as an option that if any input or input services used in exempted goods, credit should not be allowed and only with this intention some mechanisms for expunging Cenvat credit attributed only to the exempted goods are provided. As per clause (b) (ii) (iv), it is clearly provided that entire credit in respect of receipt and use of inputs/ input service is allowed when such input and input service is used in dutiable final products and taxable service. However, nowhere in Rule 6 it is provided that the input or input service used in dutiable goods shall not be allowed. The Revenue is only interpreting the term total Cenvat credit provided under the formula. If the whole Rule 6(1)(2)(3) is read harmoniously and conjointly, it is clear that Total Cenvat Credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input service and will not include the Cenvat credit on input/ input service exclusively used for the manufacture of dutiable goods. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit, denoted as A, and shall be paid; (ii) the amount of CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of nonexempted goods removed or for the provision of non-exempted services shall be called eligible credit, denoted as B, and shall not be required to be paid; (iii) credit left after attribution of credit under sub-clauses (i) and (ii) shall be called common credit, denoted as C and calculated as,- C = T - (A + B); Explanation.- Where the entire credit has been attributed under sub-clauses (i) and (ii), namely ineligible credit or eligible credit, there shall be left no common credit for further attribution. (iv) the amount of common credit attributable towards exempted goods removed or for provision of exempted services shall be called ineligible common credit, denoted as D and calculated as follows and shall be paid, - D = (E/F) x C; where E is the sum total of (a) value of exempted services provided; and (b) value of exempted goods removed, during the preceding financial year; where F is the sum total of- (a) value of non-exempted services provided, (b) value of exempted ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the provision of Rule 6 of CENVAT Credit Rules, 2004 has retrospective effect ? (ii) Whether the Hon ble CESTAT is right to hold that the amendment to rule 6(3A) by Notification No. 13/2016 CE(NT) dated 01.03.2016 of the CENVAT Credit Rules, 2004 is clarificatory in nature ? (iii) Was the Hon ble CESTAT correct in holding that Total Cenvat Credit for the purpose of formula under rule 6(3A) is only total Cenvat Credit of common input service and will not include the Cenvat Credit on input//input service exclusively used for manufacture of dutiable goods? (iv) Was the Hon ble CESTAT correct in holding that the Commissioner (Appeals) at Rajkot had the jurisdiction to hear the Appeals of the Respondent ? 12. After deliberating on the issue vide interim order dated January 23, 2020, the Hon ble High Court admitted the Appeal by framing the following questions: 3. We are inclined to admit this appeal only on the following two questions. (i) Whether the Hon ble Tribunal, is right to hold that the Notification No. 13/2016 CE(NT) dated 01.03.2016 ( effective from 01.04.2016) issued by the Government of India, Ministry of Finance, Department of Revenue, amending the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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