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TMI Blog2023 (6) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision, we do not find any error in the view of the Commissioner (Appeals) that the computation has to be done by adopting the total common Cenvat credit and not total Cenvat credit. The Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT VERSUS M/S. RELIANCE INDUSTRIES LIMITED [ 2019 (3) TMI 784 - CESTAT AHMEDABAD] had considered the issue as to interpreting the term total cenvat credit given in the formula. It was held that whole Rule 6 (1) (2) (3) has to be read harmoniously and conjointly and it would be clear that total cenvat credit for the purpose of formula under Rule 6 (3A) is only the total cenvat credit on common input services and will not include cenvat credit on input / input services exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, it would result in an anomaly that the cenvat credit which is availed for manufacture of dutiable goods also will get disallowed - The said decision was appealed by the Revenue before the Hon ble High Court of Gujarat in C.C.E AND S.T., RAJKOT VERSUS RELIANCE INDUSTRIES LTD. [ 2020 (1) TMI 1640 - GUJARAT HIGH COURT] . The Hon ble High Court vide order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted services. On perusal of the records produced before the audit, it was noticed that the appellant availed cenvat credit on common input services. They had opted to exercise the option of paying the amount as determined under sub-rule (3A) of Rule 6 of CCR 2004. While doing so, they had not adopted the formula correctly and this non-adoption of correct formula resulted in short reversal of cenvat credit as required under Rule 6 (3) of CCR 2004. Thus the appellant was liable to reverse an amount of Rs.6,63,93,170/- for the period 2012-13 to 2014-15. Show cause notice dt. 28.07.2016 was issued proposing to demand the amount which ought to have been reversed by them on proper application of the formula along with interest and also for imposing penalties. Secondly, it was also noticed that the appellant had short-paid service tax under Business Auxiliary Service (BAS) for the services rendered to NTPC. The notice proposed to demand the short-paid service tax along with interest and also for imposing penalties. After due process of law, the original authority vide order dated 27.03.2017 (impugned in Appeal No.ST/41580/2017) confirmed the amount on account of reversal of cenvat cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (a) of sub-rule (2), take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of said clause (a) and pay an amount as determined under sub-rule (3A) in respect of input services. The provisions of sub-clauses (i) and (ii) of clause (b) and sub-clauses (i) and (ii) of clause (c) of sub-rule (3A) shall not apply for such payment : Provided that if any duty of excise is paid on the exempted goods, the same shall he reduced from the amount payable under clause (i) : Provided further that if any part of the value of a taxable, service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be six per cent. of the value so exempted : Provided also that in case of transportation of goods or passengers by rail the amount required to be paid under clause (z) shall be an amount equal to 2 per cent. of value of the exempted services. It is submitted by the Ld. Counsel that as per the provisions of Rule 6 (3) of CCR 2004, the manufacturer of goods or provider of output services shall pay an amount equivalent to the credit attributable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6 (3A) of CCR. Sl.No.1 of the said circular clarifies that for the purpose of calculation of amount under formula given in Rule 6 (3A), the total cenvat credit taken on inputs and input services does not include excise duty paid on inputs or service tax paid on inputs services which are used exclusively for the manufacture of exempted goods or provisions of exempted services. The Board s circulars are binding upon the department as held by the Hon ble Supreme Court in the case of British Machinery Supplies Co. v. UOI 1991 (86) ELT 449 (SC). 9. With regard to the second issue of confirmation of demand under BAS, the Ld. Counsel submitted that appellant is only contesting the penalty imposed in this regard. Appellant had paid the service tax when pointed out by the department. Therefore, penalty imposed is required to be set aside. Ld. Counsel prayed that the appeals may be allowed. 10. Ld. A.R Shri M. Ambe appeared for the Department and supported the findings in the impugned orders. 11. Heard both sides. 12. The issue is with regard to formula that has to be adopted for reversing the credit as required under Rule 6 (3) of CCR 2004. The said sub rule has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the 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 otal 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 the interpretation of the Revenue is accepted, then the Cenvat credit of part of input service even though used in the manufacture of dutiable goods shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. 12.1 In the said case, has also considered the Notification No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput/input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. 10 . From the above it can be seen that when anomaly was noticed, the Government has substituted the sub-rule (3A). The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub-rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-rule (3A) shall have retrospective effect being clarificatory. 14. The said decision was appealed by the Revenue before the Hon ble High Court of Gujarat at Ahmedabad vide R/Tax Appeal No.850 of 2019. The Hon ble High Court vide order dated 23.01.2020 dismissed the plea of the department in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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