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2020 (11) TMI 282 - AT - Central ExciseReversal of CENVAT Credit - common input services used by the appellant for providing both taxable output services and exempted services - non-maintenance of separate records - telephone & mobile services - banking & financial services - C&F agent services - annual maintenance services - legal & professional services - manner of computation of proportionate reversal of credit determined under rule 6(3A) of the Rules - HELD THAT:- It would be clear from a conjoint reading of sub-rule 6(1), (2) and (3) of rule 6 that the total CENVAT credit for the purpose of formula under rule 6(3A) is only total CENVAT credit of common input service and cannot include CENVAT credit on input service exclusively used for the manufacture of dutiable goods - This position is also clear from the underlying object of the amendment made in rule 6(3A) of the Rules by Notification dated March 1, 2016, to consider only common input services and not total input service credit, for the purpose of computing the amount of reversal. Such amendment was also clarified by the Tax Research Unit Circular dated February 29, 2016 to apply retrospectively in as much as the clarification clearly mentions that the provisions of rule 6 providing for reversal of credit in respect of input services used in exempted services, is being redrafted with the objective to simplify and rationalize the same without altering the established principles of reversal of such credit. It has been further clarified at paragraph (iv) of the Circular that the purpose of the rule is to deny credit of such part of the total credit taken, as is attributable to the exempted services and under no circumstances this part can be greater than the whole credit. The confirmation of demand, therefore, cannot be sustained - Appeal allowed - decided in favor of appellant.
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