During audit by Service tax dept , the procedure lapse of non intimation to dept. has been detected. Whether proportionate cenvat can be allowed after reversal of cenvat on exempted services.Dept . insisting for full cenvat disallowance.
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Whether you have exercised the option under Rule 6(3)?
There is procedure lapse , no intimation to dept done.
You may now give option under Rule 6(3) and give the details of intimation as under Rule 6(3A) and sought for condonation of delay as it is not wanton. Even if the department issues show cause notice it will give weightage. In the meantime you may reverse the credit proportionately and pay also interest for the same. In the reply you can contend for proportionate CENVAT credit.
Whether Audit party will allow proportionate credit ? Pls give, if any ruling or case law to claim proportionate cenvat in case of procedure lapse.
It is up to you to challenge on your own. There is no case law in this regard to the best of my knowledge.
Ok good luck
Penalty may be proposed to impose as ignorance of law is not an excuse.
The assessee has the option of following the procedures of rule 6(3)(I) or (ii) . if no declaration filed for either of the options, then department may ask for sequential observance of the provisions. Hence they may ask for reversal of 6% of the value of exempted services.
May refer the Hon,blue APex court decision - chandrapur magnet wire
SCN will be issued for non-reversal as well as non intimation. Now ball is in the court of the department and not in the hands of asseessee.
This case law may be relevant for you.
Thanks Sir for this case law.