TMI Blog2020 (3) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... If the interpretation of the Revenue is accepted, then the Cenvat credit of part of input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. Revenue was unable to distinguish the order/decision relied on by the Ld. Advocate and nor did he file any contrary order/decision in his support - appeal allowed - decided in favor of appellant. - Excise Appeal No. E/41405 of 2018 - Final Order No. 40051/2020 - Dated:- 29-1-2020 - HON BLE MR P. DINESHA, JUDICIAL MEMBER Shri M.N. Bharathi, Learned Advocate for the appellant Shri Arul C. Durairaj, Supdt., Ld. Departmental Representative for the Respondent ORDER The appellant M/s. Lotte India Corporation Ltd., are the manufacturers of sugar confectionery and are availing input credit , capital goods credit and input service credit for dutiable as well as exempted goods under Cenvat Credit Rules, 2004. During verification of ER-1 returns department noticed a short payment of ₹ 13,96,785/- for the period 2014-15 and issued a Show Cause notice dated 15.06.2016. On adjudication, the adjudicating authority vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urairaj, Superintendent (AR) appeared for the Revenue and supported the findings of lower authorities. 4.1 After hearing both sides and having perused the material on record as also the decision of the Ahmedabad Tribunal relied on by the Learned Advocate, I find that issue on hand is no more res integra. The relevant portions relied on by the Learned Advocate are reproduced below:- 3. Shri Vishal Agarwal along with Ms. Dimple Gohil appearing on behalf of the respondent submits that primary dispute raised in the present appeal is whether, for the purpose of reversal of Cenvat credit in terms of Rule 6(3A), the total Cenvat credit means, only total of common input service or total of common input service plus credit of input service used exclusively in the manufacture of dutiable goods also. He submits that from the plain and conjoint reading of sub-rules (1), (2) and (3) of Rule 6 of Cenvat Credit Rules, it becomes clear that said Rule came into play when the manufacturer manufactures but different kind of goods i.e. one being dutiable goods and other being exempted goods. He submits that as per Rule 6(1), credit of only those input/input service which are used in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 - (a) the receipt, consumption and inventory of inputs used - (i) in or in relation to the manufacture of exempted goods; (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services - (i) in or in relation to the manufacture of exempted goods and their clearance up to the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance up to the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services,and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b). (3) Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2 per cent. of value of the exempted services. Explanation I. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation II. - For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service. Explanation III. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. (3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely :- (a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely :- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of exempted services = (J/K) multiplied by L, where J denotes the total value of exempted services provided during the financial year, K denotes the total value of dutiable goods manufactured and removed plus the total value of output services provided plus the total value of exempted services provided, during the financial year and L denotes total Cenvat credit taken on inputs during the financial year minus H; (iii) the amount attributable to input services used in or in relation to manufacture of exempted goods and their clearance up to the place of removal or provision of exempted services = (M/N) multiplied by P, where M denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the financial year, M denotes total value of output and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the financial year, and N denotes total CENVAT credit taken on input services during the financial year; (d) the manufacturer of goods or the provider of output service, shall pay an amount equal to the difference between the aggregate amount determined as per cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined under condition (h) is not paid within the said due date i.e., the 30th June, the manufacturer of goods or the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty-four per cent. per annum from the due date till the date of payment. From the reading of Rule 6(1), it is clear that only in respect of input or input service used in exempted goods are not allowed. That means input or input service used in taxable service/dutiable goods, Cenvat credit is allowed. Sub-rule (2) of Rule 6 is only as an option that if any input or input services used in exempted goods, credit should not be allowed and only with this intention some mechanisms for expunging Cenvat credit attributed only to the exempted goods are provided. As per clause (b)(ii) (iv), it is clearly provided that entire credit in respect of receipt and use of inputs/input service is allowed when such input and input service is used in dutiable final products and taxable service. However, nowhere in Rule 6 it is provided that the input or input service used in dutiable goods shall not be allowed. The Revenue is only interpreting the term total Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as T, in the following sequential steps and provisionally pay every month, the amounts determined under sub-clauses (i) and (iv), namely :- (i) the amount of CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services shall be called ineligible credit, denoted as A, and shall be paid; (ii) the amount of CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services shall be called eligible credit, denoted as B, and shall not be required to be paid; (iii) credit left after attribution of credit under sub-clauses (i) and (ii) shall be called common credit, denoted as C and calculated as, - C = T - (A + B); Explanation. - Where the entire credit has been attributed under sub-clauses (i) and (ii), namely ineligible credit or eligible credit, there shall be left no common credit for further attribution; (iv) the amount of common credit attributable towards exempted goods removed or for provision of exempted services shall be called in ..... 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