9911796707
TMI Blog2022 (6) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... other than a preliminary survey of the law and, thereby, depriving it of status as binding precedent. CENVAT credit scheme is operated through the self-contained CENVAT Credit Rules, 2004 and its essence is availment and utilization in self-maintained records that, once reported in periodical returns, becomes irretractable except by revision in subsequent return. The filtration for availment is conformity with rule 3 of CENVAT Credit Rules, 2004 and utilization is governed by rule 4 of CENVAT Credit Rules, 2004. Recovery of ineligible credit is enabled through rule 14 of CENVAT Credit Rules, 2004. Rule 6 of CENVAT Credit Rules, 2004 is not, by any stretch, a substitute for either rule 3 or rule 14 of CENVAT Credit Rules, 2004 - it is clear that the signification of the formula for apportionment of credit relates to such credit as is not amenable to attribution according to the taxability, or otherwise, of goods manufactured or service rendered. Impliedly, such impediment arises from impossibility of recording, or unwillingness to maintain, separate account of deployment. The sole change brought about by the amendment of 2016 has, all the same, to do with the extent of detailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -15, the appellant had rendered services valued at ₹ 354,78,35,104 of which ₹ 9,57,75,175 was attributable to trading and credit of ₹ 13,32,09,285 availed by them was sought to be curtailed by ₹ 35,96,036 instead of ₹ 12,50,567 acknowledged in the reversal effected by them. According to the tax authorities, only credit to the extent that the value of taxable services bore to the value of total services could be retained; the assessee reversed credit in such proportion as the value of the exempt service bore to the value of taxable service for the relevant year. 2. Before proceeding to consider the submissions on behalf of the appellant and of Revenue, enunciation of the source of the varying interpretation of the statutory measure for adjustment may well be warranted. Credit, validly availed upon procurement of input service , may carry the taint of subsequent ineligibility from deployment in rendering of exempted service or manufacture of exempted goods in common with eligible services and goods and, unlike inputs , may not be amenable to particular correlation. The erasure of the ineligible portion of such credit, in keeping with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order has, with its emphasis on the formula, held that .. 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, N 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 P denotes total CENVAT credit taken on input services during the financial year. Thus, the term used in the rule is total CENVAT credit taken on input services and is not common input services. The appellant, while calculating the amount, have taken into consideration the common input service instead of total cenvat credit. Term P has been interpreted case of Thyssenkrupp industries (I) Pvt. Ltd Vs. Commissioner of C. EX., Pune reported in 2014 (310) ELT 317 (Tri-Mumbai)] were term P has been explained in paragraph 5 stating that it should be noted that P denotes the total Cenvat Credit taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization, without attendant detriment, of credit that, validly availed upon procurement of input/input service, transforms, owing to subsequent deployment, as ineligible for continuance which is made abundantly clear in (1) The CENVAT credit shall not be allowed on such quantity of input used in or in relation to the manufacture of exempted goods or for provision of exempted service, or input service used in or in relation to the manufacture of exempted goods and their clearance up to the place of removal or for provision of exempted services, except in circumstances mentioned in sub-rule (2); in rule 6 of CENVAT Credit Rules, 2004 and acknowledges the possibility of input/input service used in common for rendering output service or in manufacture of output as well as for rendering exempted service or in production of exempted goods which must be reversed or regularized. Intrinsic to such reversal is the maintenance of separate accounts of deployment in terms of eligibility/ineligibility as prescribed in rule 6(2) of CENVAT Credit Rules, 2004. The convenience of non-maintenance of such meticulous record-keeping carries the price of imprecise apportionment in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice even though used in manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. The said dispute did not arise in the context of rendering taxable and exempt service but in relation to goods of which some were non-dutiable; the context of applicability of the formula is slightly at variance with that in the impugned order. Nevertheless, disaggregation of input service has been approved therein. 9. In E-Connect Solutions (P) Ltd v. Commissioner of Central Excise CGST, Udaipur [2021 (376) ELT 678 (Tri-Del)], disputation over the meaning of total CENVAT credit in rule 6(3A) of CENVAT Credit Rules, 2004 was brought before the Tribunal and it was held that 18. It would appear from a conjoint reading of sub- rules 6 (1), (2) and (3) that the total Cenvat credit for the purpose of formula under Rule 6 (3A) is only total Cenvat credit of common input service and cannot include Cenvat credit on input service exclusively used for the manufacture of dutiable goods. 19. This position is also clear from the underlying object of the amendment made in Rule 6 (3 A) of the Rules by Notification dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such credit may extend anywhere between nil and the entirety of CENVAT credit with the gap increasing upon accountal of each service in the manner prescribed in rule 6(2) of CENVAT Credit Rules, 2004. Therein lies the nub: it is not the total lack of separate accounting but the incompleteness of that which can give rise to disputations such as this. The claim of the appellant for discarding of the determination in the impugned order rests upon correct segregation of credit taken on input services between eligible and ineligible except to the extent that the formula had to be resorted to; the claim of Revenue rests upon the lack of such segregation of the entire credit. Neither the submissions during the hearing nor the records of the proceedings before the lower authorities indicate such partial segregation or the correctness of it. In the absence of such ascertainment, the principle alone can established with the consequent impact on the recovery to be quantified upon presentation of the segregated accounts and verification thereof. 12. For that purpose, the impugned order is set aside and the re-computation restored to the original authority before whom the accountal of cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
