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2019 (2) TMI 1382 - CESTAT CHENNAICENVAT Credit - proportionate credit attributable to exempted services - taxable service “hypothecation and loan activity” - Rule 6(3A) of the CENVAT Credit Rules 2004 - determination of the amount that has to be reversed by the appellants when common inputs/input services are used for providing output services - appellants have maintained separate records with regard to the common inputs used for the exempted as well as taxable output services - Held that:- The dispute in this case is with regard to the exemption given by Notification No. 04/2006 dated 01.03.2006 wherein 90% of the amount of interest received in granting loans and financing services is exempted. By such Notification, service tax is required to be paid on a value equal to 10% of the total amount representing interest; balance 90% thus enjoys exemption from payment of service tax. The Show Cause Notice has been issued alleging that the appellant has to consider the 90% which enjoys exemption from payment of service tax as exempted services and include this value for arriving at the amount that has to be reversed - The formula prescribed in Rule 6(3A) also uses the word “exempted services” and is not qualified by saying exempted services as well as that part of the services which are exempted. Therefore, for applying the formula, only those services which are wholly exempted from service tax can be included to indicate the value of exempted services. The assessing officer shall carry out the computation afresh and requantify the liability, if any - Appeal allowed in part.
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