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2017 (11) TMI 33 - AT - Service TaxCENVAT credit - providing of taxable as well as exempt services - non-maintenance of separate accounts for receipt, consumption and inventory of input/input services meant for used in output services as required in terms of Rule 6(2) of the CCR, 2004 - legality of the demand to disallow and recover CENVAT credit on input services exclusively used for exempted output services to the tune of ₹ 91,16,244/- - Held that: - whereas appellants have claimed that they have made payment of entire amount of CENVAT credit availed irregularly and accordingly the violation of Rule 6(1) of the CCR, 2004 has been made good, the adjudicating authority has noted that there is no clarity whether the payment made by the assessee has covered all the input services which are used in exempted output services - having observed that the details given by the appellants are not clear and each transaction is required to be verified, the adjudicating authority nonetheless goes ahead to confirm the disallowance of CENVAT credit of ₹ 91,16,244/- apparently taken in excess and irregularly, without any justification for that decision. In our view, such peremptory confirmation of demand without resolving the very evident confusion in the working thereof, cannot be sustained - matter on remand. Legality of demand of ₹ 34,20,440/- for the period April 2008 to March 2010 under Rule 6(3) of CCR, 2004 - Held that: - the manner of calculation of 6% or 8% on value of exempted services has not been disputed by the appellant. We also find that with effect from 01.04.2008, Rule 6(3) the CCR, 2004 was specifically amended to bring forth this method of calculation for purposes of Rule 6(3). This being the case, we do not find any infirmity in that portion of the impugned order upholding the demand of ₹ 34,20,440/-, along with interest liability thereon, for the period April 2008 to March 2010. Penalty - Held that: - the entire issue has emanated out of a dispute between the appellant and the department on the method and manner of calculating the amount of CENVAT credit that can be availed in the situation where both exempted and taxable output services were provided. In these circumstances, we are of the considered opinion that imposition of penalty in this case would be a overkill - penalty set aside. Appeal allowed in part and part matter on remand.
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