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2018 (12) TMI 426

period of limitation - Held that:- The intention of the Legislature was that a manufacturer or a service provider should not avail the entire CENVAT credit of the service tax paid on common input services and should avail proportionate credit attributable to the taxable output service for which the CENVAT credit Rules provides for maintaining separate accounts. - Appellant herein has followed this rule by taking the credit of only an amount which is attributable to the taxable services provided by him and not availing the CENVAT credit of the input services which are attributable to the trading activity. By availing only the CENVAT credit of the service tax paid attributable to the taxable services, in my view, appellant had complied w .....

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VAT credit attributable to trade activity based upon the turnover as provided under Rule 6(2) of Cenvat Credit Rules, 2004. It is the case of Revenue that appellant having not maintained separate accounts for the input services used for taxable and non-taxable services, is required to pay an amount as provided under Rule 6(3A) of CCR 2004. Appellant in his reply to the show cause notice pointed out that they had in fact availed CENVAT credit of the common input services attributable to the taxable services and had not availed the CENVAT credit for the non taxable activity i.e. trading activity and explained the rationale as to that this has been done based upon the trading activity to the total turnover. Not satisfied with such an explanati .....

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ed returns with the authorities regularly and audit has taken place and the decision of the Tribunal in the case of Sanjay Automobile Engineering Pvt. Ltd. is on the same issue wherein the Tribunal took a view that if one audit is carried out then the extended period cannot be invoked. It is his further submission that the department has been conducting EA 2000 audits every year without break and in none of the audits this anomaly which is said to be pointed out, was indicated. 4. Ld. DR on the other hand submits that the provisions of Rule 6(2) is applicable for the period in question i.e. March 2012 to March 2015 indicates that appellant should maintain separate accounts for the goods and services used in relation to the provision of outp .....

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t the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. 6(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only .....

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services is being written off in the Profit and Loss Account. In case of input services which are used in taxable as well as exempted services, they are making the reversals at the end of the month. In view of the above, it is evident that appellants have maintained separate records as required under CENVAT Credit Rules. They have produced Chartered Accountant certificates before the learned Commissioner, however, out of above five appeals, only in one case the Commissioner has caused a factual enquiry and has stopped the proceedings. It is not understood as to why such an enquiry was not conducted in respect of other show-cause ST/1252/2010; ST/1721/2011; ST/1700-3466/2012; & ST/21676/2014 12 notices. Understandably, the appellants are .....

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ed in sub-rule (1) and sub-rule (2) of CCR 2004. When sub-rule (2) is read that throws light that appellant has chosen a way of maintaining its record which enabled it to substantially allocate the cenvat credit of service tax suffered by the departments in Table-C and partly to the department in Table-B. It has complied to the provisions of sub-rule (2) of Rule 6. Once the conduct of the appellant in the manner indicated by the material facts stated above is very clear because of the proportionality of the credits allocated, due to its division of the department and maintenance of records, there cannot be any presumption by Revenue that the appellant's case falls under Rule 6 (3) of CCR 2004. It is also apparent from record that the or .....

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