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2022 (11) TMI 861 - AT - Service TaxReversal of proportionate CENVAT Credit - common input services have been used in the manufacture of excisable goods as well as in the trading activity - failure to maintain separate accounts to utilize the CENVAT credit - Recovery of 5%/ 6%/ 7% of the value of exempted service in accordance with Rule 6(3)(i) of the Cenvat Credit Rules, 2004 as amended - HELD THAT:- In the present matter appellant admittedly reversed the proportionate Cenvat Credit attributable to the trading activity/ exempted service, this is not under dispute. Therefore the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, 2004 therefore demand of huge amount on the total value of the trading activity @ 5% / 6%/ 7% cannot be demanded. Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services - when the appellant have categorically agree for the reversal of Cenvat credit by way of opting for option provided under sub-rule (3)(ii), how Revenue can insist that option (3)(i) under Rule 6 should only be followed by the assessee. The demand confirmed by the adjudicating authority has no legs and therefore the same cannot be sustained. The impugned orders demanding amount equal to 5%/ 6%/ 7% are set aside and the matters are remanded to the adjudicating authority to verify and pass a fresh order regarding the correctness of proportionate credit to be reversed in this matter after giving a reasonable opportunity of hearing to the appellants - appeal allowed by way of remand.
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