TMI Blog2019 (3) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... e (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 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envat credit on inputs and input services which are exclusively used by it in the manufacture of dutiable goods. They also receive common input services, which are used in the manufacture of both dutiable and exempted goods. The Respondent did not maintain separate accounts for apportionment of common credits between manufacture of dutiable goods and exempted goods and therefore, computes the credit to be reversed on common input services in terms of formula prescribed under Rule 6(3A) of the CCR and has filed necessary declaration for this purpose. Initially they computed the reversal of credit on common input services by apportioning the total Cenvat credit, taken on input services during the financial year between the exempted goods and dutiable goods since, Rule 6(3A)(c)(iii) as existed during the relevant period used the expression total Cenvat credit . As per the contention of the respondent, though what was required to be apportioned, was only the credit common to the manufacture of dutiable and exempted goods and not the total Cenvat credit . For the purposes of apportioning the Cenvat credit on common input services, the total Cenvat credit cannot be taken since, the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and other being exempted goods. He submits that as per Rule 6(1), credit of only those input/ input service which are used in the manufacture of exempted goods are not allowed. However, the same does not apply to the input/ input service used in the manufacture of dutiable goods. He submits that as per Rule 6(2), the assessee can avail credit only on such input/ input service which are used in or in relation to manufacture of dutiable final product. As per Rule 6(3), the manufacturer opting not to maintain separate accounts, can opt to pay an amount in terms of the formula prescribed in sub-Rule (3A). He submits that in so far as the common input/input service is concerned, Rule 6 envisages that the same shall be apportioned on the basis of turn-over of dutiable and exempted goods. It is in this context that the expression total Cenvat credit taken used in Rule 6(3A)(c)(iii) refers to the total Cenvat credit on common input services alone and not the total Cenvat credit on all input services. 4. He further submits that as the Revenue was raising dispute with respect to interpretation of the expression total Cenvat credit on input services , the Central Government amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.) and Burn Standard Company Limited vs. CCE 2010 (262) ELT 786 (Tri.) which has been affirmed by the Hon'ble Madras High Court reported as CCE vs. Burn Standard Company Limited 2013 (295) ELT 671 (Madras) As regards the issue of jurisdiction raised by the Revenue in their appeal, Ld. Counsel submits that, after the GST regime, the centralized registration for principal States, in respect of all the units within one State is centralized. Therefore, all the units within the State of Gujarat, only one registration where the GST registration was taken and the adjudication and appeal shall be entertained in that jurisdiction. 7. We have carefully considered the submissions made by both the sides and perused the record. The limited issue to be decided in this case is that for the purpose of calculating the Cenvat credit for reversal in terms of Rule 6(3A) as per of formula given therein, whether the total Cenvat credit means it is including the Cenvat credit of input services exclusively used for dutiable product should be taken or total Cenvat credit of only common input service should be taken. Before proceeding, it is necessary to read the relevant Rule 6(1)(2)(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, 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 (3 A); or (iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in 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 clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices; (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 the option under this condition; (b) the manufacturer of goods or the provider of output service shall, determine and pay provisionally, for every month,- (i) the amount equivalent to CENVAT credit attributable to inputs used in or relation to manufacture of exempted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional) = (B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of output services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A; (iii) the amount attributable 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 (provisional) = (E/F) multiplied by G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the provider of output service, shall, in addition to the amount short-paid, be liable to pay interest at the rate of twenty-four per cent per annum from the due date, i.e., 30th June till the date of payment, where the amount short-paid is not paid within the said due date; (f) where the amount determined as per condition (c) is less than the amount determined and paid as per condition (b), the said manufacturer of goods or the provider of Output service may adjust the excess amount on his own, by taking credit of such amount, (g) the manufacturer of goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of payment or adjustment, as per condition (d) and (f) respectively, the following particulars, namely - (i) details of CENVAT credit attributable to exempted goods and exempted ser 4L vices, month wise, for the whole financial year, determined provisionally as Per condition (b), (ii) CENVAT credit attributable to exempted goods and exempted services for the: whole financial year, determined as per condition (c), (iii) amount short-paid determined as per conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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. 9. An amendment made in Rule 6(3A) by Notification No. 13/2016-CE (NT) dated 01.03.2016. The amended sub rule (3A) of Rule 6 of Cenvat Credit Rules, 2004 is reproduced below:- Sub-rule (3A) as per Notification No. 13/2016-CE (NT) dated 01 Mar 2016 (d) for sub-rule (3A), the following sub-rule shall be substituted, namely:- (3A) For determination of amount required to be paid 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) 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 number of the manufacturer of goods or provider of output servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 services provided, (c) value of non-exempted goods removed, and (d) value of exempted goods removed, during the preceding financial year : Provided that where no final products were manufactured or no output service was provided in the preceding financial year, the CENVAT credit attributable to ineligible common credit shall be deemed to be fifty per cent. of the common credit; (v) remainder of the common credit shall be called eligible common credit and denoted as G, where,- G = C - D; Explanation.- For the removal of doubts, it is hereby declared that out of the total credit T, which is sum total of A, B, D, and G, the manufacturer or the provider of the output service shall be able to attribute provisionally and retain credit of B and G, namely, eligible credit and eligible common credit and shall provisionally pay the amount of credit of A and D, namely, ineligible credit and ineligible common credit. (vi) where manufacturer or the provider of the output service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one registration for a State and all the units within that State are covered under one registration. In this regard the Board has issued Circular No. 1056/05/2017-CX dated 29.06.2017, which is especially meant for LTUs in the GST regime. The relevant paragraph are reproduced below:- Subject: Handling of legacy work of LTUs in the GST regime-reg GST would be implemented from 1st July, 2017. It is proposed to wind up Large Taxpayer Units (LTUs) in the new regime as the concept of state wise registration applies in GST. In this regard, reference has been received on the issue of handling of legacy work of the present LTUs in the GST regime. 2. . 3. Appointment of Common Adjudicating Authority for Show Cause Notices issued by LTUs:- 3.1 Immediate attention is required on adjudication of pending show cause notices issued on Central Excise and Service tax matters by LTU formations. The cases pending adjudication will be sent to the proposed jurisdictional CGST Commissionerates for adjudication. In this regard there should be no difficulty in respect of Central Excise adjudications as Central Excise SCNs are generally issued based on the individual registrations. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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