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TMI Blog2023 (1) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... service and not of input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the respondent in its entirety. It needs to be noted that in the present case also, the appellant has not taken credit on the input and input services used in provision of exempted services. Thus, the decision of the Tribunal in M/S NATIONAL STEEL AGRO INDUSTRIES LIMITED VERSUS PRINCIPAL COMMISSIONER, CENTRAL GOODS SERVICE TAX CENTRAL EXCISE - UJJAIN [ 2021 (6) TMI 60 - CESTAT NEW DELHI ] rendered for the period prior to 2016 will apply to the facts to the present case, where it was held that Since the appellant has followed Rule 6(2) and has not taken any CENVAT credit on the input services whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014-2015 to 2018-2019. 2. The appellant, which is a joint venture between GAIL (India) Ltd [GAIL] and Hindustan Petroleum Corporation Ltd [HPCL], is engaged in the manufacture of Compressed Natural Gas [CNG]. For this purpose, the appellant procures natural gas from GAIL through pipelines. Part of this gas is used by the appellant for producing CNG at various CNG stations. CNG is also cleared by the appellant on payment of central excise duty. The appellant claims that the remaining natural gas is supplied to other users as Piped Natural Gas [PNG], which activity according to the appellant should be considered as exempted service under the 2004 Credit Rules: 3. The appellant availed and utilized credit on input services which are excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d penalty. 6. Accordingly, a show cause notice dated 20.03.2019 was issued to the appellant proposing to recover central excise duty with interest after invoking the extended period of limitation contemplated under section 11(A)(4) for the Central Excise Act, 1944 on the incorrect valuation adopted for sale of CNG to HPCL. The show cause notice further proposed recovery of short reversed proportionate CENVAT credit under rule 6 of the 2004 Credit Rules with interest. The appellant filed a reply to the show cause notice but the Joint Commissioner passed an order dated 03.10.2019 confirming the demand proposed in the show cause notice. Being aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who by order dated 20.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Rule 6 must be read as a whole while interpreting this formula. Rule 6(1) prohibits any credit on inputs and input services used in or in relation to exempted goods or exempted services. The rationale of this provision is evident. CENVAT credit enables one to use the credit to reduce duty or tax liability on the output goods or services. If they are not chargeable to duty or tax, one cannot take credit either. However, there are those who produce both dutiable and exempted goods and taxable and exempted services. Rule 6(2) deals with such situations and requires such a person to maintain separate records and take credit only the inputs and input services which are used for manufacture of dutiable goods or provision of taxable services. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here it is not feasible to do so. It would have been a different situation if the appellant had not followed Rule 6(2) at all and took credit on all the inputs and input services regardless of whether they are attributable to the manufacture of dutiable goods or provision of exempted services. Then the total CENVAT credit taken during a year would have included all the CENVAT credit taken. 11. After placing reliance on the decision of the Ahmadabad Bench of this Tribunal in CCE ST, Rajkot vs. Reliance Industries Ltd [2019 (3) TMI 784-CESTAT Ahmadabad], the Tribunal further observed as follows: 33. Since the appellant has followed Rule 6(2) and has not taken any CENVAT credit on the input services which were used exclusively for pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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