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2015 (11) TMI 1047 - AT - Service TaxCENVAT credit - credit on exempted service - non maintenance of separate accounts - failure to exercise the option to avail the provisions of Rule 6(3A) in writing - Held that:- Commissioner’s conclusion in the impugned order that in view of the retrospective amendment to Cenvat Credit Rules, procedure followed by the assessee can be said to have fulfilled the requirement in my opinion is not correct. This is in view of the fact that amendments were carried out and benefit of payment of proportionate credit or Cenvat credit attributable to exempted goods and services was extended only to manufacturers and not to service providers - In this case there is no such ambiguity or lack of clarity in the amendments or Finance Act brought out in the year 2010. Therefore I am unable to consider this submission. The second conclusion the Commissioner has reached is that the omission or intention is only technical and reversal has been done as required under Rule 6(3) (ii) of the Cenvat Credit Rules 2004. In view of the amendment in 2010, once the amendment is not applicable, the benefit of subsequent reversal will not be available. The amendment brought out in the year 2010 clearly provided for subsequent reversals by the manufacturers where they had omitted to reverse the credit earlier and according to the law they would have been required to pay 6%/8%/10% as the case maybe. Option to avail the provisions of Rule 6(3A) in writing - Held that:- If we accept that even after 01.03.2008 that would be the situation, we will be rendering the provisions of Sub-rule (3A) of Rule 6 of CCR 2004 totally irrelevant and otiose. This cannot be the intention of the legislature. In such a situation applying the decision which was rendered prior to 01.03.2008 and taking a view that option can be exercised at any time or reversal can be made subsequently would be totally against the law as well as the intention of the legislature. The learned DR countered this by submitting that the fact that the explanation provides that it shall not be withdrawn during the remaining part of the financial year shows that it has to be exercised within the same financial year. However it is difficult to come to the conclusion that because of this particular clause, the explanation has to be understood to mean that option should be exercised within the financial year. - However it is difficult to come to the conclusion that because of this particular clause, the explanation has to be understood to mean that option should be exercised within the financial year. Services provided to SEZ units - Held that:- in respect of clearances to SEZ United Nations, there was no need for reversal of Cenvat credit or payment of the percentage of the amount prescribed under Rule 6(3) of Cenvat Credit Rules 2004. In view of the fact that Commissioner (Appeals) has already allowed benefit wrongly as held by me and further in view of the complexity of the nature, in my opinion as a special case, the assessee can be allowed to regularize the activity undertaken by them by submitting a detailed letter as contemplated in Sub-rule (3A) of Rule 6 of Cenvat Credit Rules. Whether it is rectifiable or not is another complicated question which in my opinion goes in favour of the assessee mainly because of the discussion given above and entire facts and circumstances of this case. Appellant would be eligible to reverse the proportionate credit attributable to clearances to Jammu & Kashmir State alone for the year 2008-09 subject to the condition that within 30 days from the date of this order they will file a letter rectifying the deficiencies in the letter of option given by them as contemplated in Rule 6(3A) of Cenvat Credit Rules 2004. - Decided in favor of assessee.
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