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2018 (7) TMI 409 - AT - Central ExciseEligibility for recourse to payment of such amount as is prescribed in rule 6(3)(ii) of CENVAT Credit Rules, 2004 - noncompliance with the conditions in rule 6(3A) of the said Rules - Held that:- There can be no doubt that the scheme of provisional payment of tax at the end of each month with adjustment for actuals at the end of the year attaches significance to the proportion that the credit of inputs/input services bears to that the exempted output/output services has with that of the total output/output services. While the provisional tax is to be based on the data of the previous financial year, the final adjustment is based on data for the relevant financial year. Accordingly, rule 6(3A) of Cenvat Credit Rules, 2004, while assuming that inputs used exclusively for manufacturing of exempt goods, can be isolated, acknowledges that inputs utilised for rendering of exempt services and input services used for provision of exempt services and exempted of input goods are not easily segregated. To the extent that input services have been used in common for dutiable and exempted goods, option of recourse to rule 6(3A) of CENVAT Credit Rules, 2004 cannot be denied - It is obvious that the adjudication order is based on the incorrect appreciation of the reasoning for such apportionment in the rules and the principle underlying the formula. The denial of the facility of reversal of proportionate credit is not consistent with law. The appellant is entitled to such reversal as an alternative to payment of 6% of the value of exempted goods. Appeal allowed - decided in favor of appellant.
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