TMI Blog2018 (11) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... urning to the period post 01.04.2008, it is noted that Rule 6(3) has been amended from this date and Rule 6 (3A) has been inserted in place of the erstwhile Rule 6(3) (c) which had prescribed a limit of 20% on the common input services credit. Rule 6(3A) has prescribed the procedure for proportionate reversal of credit availed on common input services - The Tribunal in the case of M/S. SIFY TECHNOLOGIES LTD. VERSUS COMMISSIONER OF SERVICE TAX, LTU, CHENNAI [2018 (9) TMI 317 - CESTAT CHENNAI] has upheld that in respect of common input services, an assessee will need to follow either sub rule 2 or Sub Rule 3 of Rule 6. By maintaining separate accounts and availing cenvat credit only in respect of the exclusively taxable services in full, the appellant has subscribed to sub rule 2 - even for the period post 01.04.2008, despite the amendment carried out in Rule 6(3) and insertion of sub Rule 3A the decision of Tribunal is followed. Another case of appellant is that the appellant is entitled to the full cenvat credit in respect of input services specified in Rule 6(5) of the Cenvat Credit Rules - Held that:- This sub rule permits full credit of 17 services specified therein - there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 in which the entire cenvat credit availed on common input services was ordered to be reversed. Aggrieved by the decision, the present has been filed. 3. With the above background heard Sh Raghavan Ramabadran, ld. Advocate for the appellant as well Sh. K. Veerabhadra Reddy, JC (AR) for the department. 4. The arguments advanced by the ld. Advocate are summarized below:- a. An identical issue in respect of SFL prior to it merger with SCL had already been raised by Revenue by way of show cause notice no. 48/2006 dated 12.10.2006 which was decided by issue of Order-in-Original dated 30.09.2009. The appeal against the said Order-in-Original, covering the period 01.04.2005 to 31.03.2009 has already been heard [Appeal no. ST/00028/2010] by this bench on 06.08.2018 and order is reserved. He wished to adopt the arguments already raised in the above appeal for the period upto March 2008. He also argued that the show cause notice dated 06.01.2011 is time barred for the period prior to September 2009, in view of the fact that for an identical issue, an earlier show cause notice dated 12.10.2006 had been issued to the appellant. b. Coming to the period post 01.04.2008, the ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance aspect of manufacturer/ provider of output service with reference to common input services. He emphasized that the appellant has chosen the option of maintaing separate account as required under Rule 6(2) and has availed the credit in full in respect of the taxable services and NIL in respect of services exclusively used for exempted services. He submitted that in spite of the amendments carried out on 01.04.2008, the appellant will not be entitled to any credit on common input services. (d) Even though the appellant has carried out proportionate reversal of common input services as per Rule 6(3A), the appellant cannot be allowed to avail the cenvat credit on common input services since they have opted to follow Rule 6(2). 6. Heard both sides and carefully perused the record. 7. For the period up to 31.03.2008, both sides agree that the issue on merit is identical to the issue decided in order in original dated 30.09.2009. The appellant has challenged the said order in appeal no. ST/00028/2010, which was heard on 06.08.2018. Subsequently the order has also been pronounced on 30.08.2018 and the appeal was dismissed vide final Order No. 42327/2018 dated 30.08.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a reason to establish the awareness of department regarding the nature of maintenance of accounts and availment of credit by Sify Comm. When separate set of accounts are being maintained by the taxpayer, there is not question of availing credit on common input service, which they were doing and suppressing the said fact from the Department, which came to light only after verification. Thus the taxpayer cannot escape the proviso to Sec. 73(1), as they have suppressed material facts with an intent to avail excess credit to which they are not eligible. I therefore hold that extended period of limitation under Rule 14 of CCR read with proviso to Sec. 73(1) for demand of excess credit availed has been rightly invoked. Since SCL and SFL remained as separate entities prior to their merger, we are of the view that invoking the extended period of limitation in the second show cause notice dated 06.01.2011 will not be against the order of the Supreme Court in the Nizam Sugar case. 10. On the main issue of common input services for the period upto 01.04.2008, the relevant findings of the Tribunal vide Final Order No. 42327/2018 dated 30.08.2018 are reproduced below. 9. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) (c) the provider of output service shall utilize credit only to extent of an amount not exceeding twenty per cent of the amount of service tax payable on taxable output service. 10. It is clear that Rule 6 (1) is a substantive plenary provision. Hon'ble Supreme Court in CCE Vs Gujarat Narmada Fertilizers Co. Ltd. - 2009 (240) ELT 661 (SC) held that sub rule (1) of Rule 6 is plenary. It restates a principle, namely, that CENVAT credit of duty paid on inputs used in the manufacture of exempted final product is not allowable This principle is inbuilt in the very structure of the CENVAT scheme. Sub-rule (1), therefore, merely highlights that principle. Sub-rule (1) covers all inputs, including fuel, whereas silly-rule (2) refers to non-fuel inputs. Sub-rule (2) as well as (3) put in place the mechanism to comply with the mandate of sub-rule (1) in the case of a manufacturer/provider of an output service availing CENVAT Credit, but manufactures/provides output services which are both chargeable to duty as well as exempted. Sub-rule (2) requires the manufacturer/provider of output service to maintain separate accounts for inputs/input services w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of such input services on which credit is availed. 12. Sub-rule (3) of Rule 6 is another option available to the assessee who opts not to maintain separate accounts under sub-rule (2). Thus sub-rule (3) provides for a situation when a manufacturer / service provider who is using common inputs for dutiable and exempted products is not able to maintain separate accounts. Though the sub-rule uses the words 'opting not to maintain separate accounts', in fact, the same has to be construed to mean a situation when he is not able to maintain separate accounts for e.g:- due to the complex process of manufacture or complex stream of use of such inputs / input services. There is no compulsion on the manufacturer / service provider to maintain separate accounts, and the manufacturer / output service provider can opt not to maintain separate accounts by following sub-rule (3). Thus sub-rule (2) takes care of manufacturer / service provider who can maintain separate accounts. However, the options are left open to both categories by the use of non-obstante clause in sub-rule (3). In other words, it cannot be said that for certain input services, the assessee can maintain separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cannot take a plea that there is no provision to deny credit already availed. When the appellants maintained separate accounts for common input services and availed credits under sub-rule (2) of Rule 6, then there is no question of another option for common input services under sub-rule (3) of Rule 6 11. By following our order (supra) in respect of the appellant we hold that appellant will not be entitled to credit on common input services. Turning to the period post 01.04.2008, we note that Rule 6(3) has been amended from this date and Rule 6 (3A) has been inserted in place of the erstwhile Rule 6(3) (c) which had prescribed a limit of 20% on the common input services credit. Rule 6(3A) has prescribed the procedure for proportionate reversal of credit availed on common input services. In spite of delay in filing the option under Rules 6(3A), the appellant has claimed that they have complied with the proportionate reversal, in respect of credit availed on common input services and this satisfies requirement of Rule 6(3). Consequently they have argued that Revenue was not justified to order reversal of the entire common input services credit. 12. As discussed above, we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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