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2018 (12) TMI 426

CENVAT Credit - common inputs and input services used of manufacture of goods as well as for taxable and exempt service - non-maintenance of separate records - Rule 6(3A) of CCR 2004 - Extended 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 .....

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audit - Held that:- The audits were regularly conducted and this objection was never raised, in view of it, even on limitation also appellant succeeds. - Appeal allowed on merits as well as on limitation. - APPEAL No. E/30502/2018 - A/31495/2018 - Dated:- 4-12-2018 - Mr. M.V. Ravindran, Member (Judicial) Shri Karan Talwar, Advocate for the Appellant. Shri Moin. Anwar, Asst. Commissioner/AR for the Respondent. ORDER Per: Mr. M.V. Ravindran 1. This appeal is directed against Order-in-Appeal N .....

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t 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 explanation, show cause notice was issued stating that the method adopted by appellant is incorrect and non-permissible and he should have reversed an amount s per provision of Rule 6(3A) of CCR 2004. Adjudicating authority, after following due process of law, confirmed the demands so raised along with int .....

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6(2). Further, it is his submission that the demands are hit by limitation as the extended period is invoked for demanding ineligible CENVAT credit and that during the period in question, appellants filed 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 f .....

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g activity (exempted services) on a mathematical formula which was followed by him which is the turnover of the trading activity of the total turnover multiplied by CENVAT credit availed on common input services, that every month they have been filing the returns with the authorities giving all the details of such reversals; that many audits have taken place in the factory premises and only in subsequent audit, had brought out this anomaly. 6. Relevant provisions of Rule 6 which is applicable fo .....

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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 on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. 7. It is seen from the above reproduced provisions that the intention of the Legislature was that a manufacturer or a service pr .....

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ses regarding the credit to be availed in respect of services rendered. They are taking the credit on services which are used wholly in taxable services as direct credit and the credit used in exempted 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 un .....

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ogies Limited, the issue is more specific and in para No. 8, 9 & 10, the Bench held as under: 8. Factually, the appellant has made its case very clear that it had received input services for its departments tabulated in Table-C. The input tax suffered on such services were allocated substantially to the departments in Table-A which provided taxable service and a minor part thereof to the department in Table-B. To this extent, the facts remained undisputed. Reversal of cenvat credit of ₹ .....

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ion 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 order passed by the Authority below is unreasonable for the reason that as against credit of ₹ 6,66,423/- allocated to the department in Table- B which provided exempted service, disallowance of entire credit of Rs.1,11,07,075/- allocated to Departments in Table-A providing taxable service is .....

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on of invoking the extended period in a situation wherein the records of the appellant were audited time and again by EA 2008 audit, I find that Ld. Counsel was correct in bringing to my knowledge that the Tribunal in the case of Sanjay Automobile Engineering Pvt. Ltd., following the judgment of Hon ble High Court of Karnataka in the case of MTR Foods [2011-TIOL-695-HC-KAR-CX] held that there cannot be any allegation of mis-statement or suppression of facts when audits have been conducted at reg .....

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