[2015] 59 taxmann.com 194 (Mumbai – CESTAT) – Rathi Daga vs. CCE, Nashik

Facts:
The appellant paid service tax under chartered accountants service and his services also included certain exempt services. It was detected by the audit team of the department that it did not maintain separate accounts for services used in providing taxable and exempted services as required under Rule 6(2) of the CENVAT Credit Rules, 2004. Before issue of Show Cause Notice, the appellant however paid an amount equivalent to CENVAT credit based on proportionate reversal method under Rule 6(3) (ii). However, the department issued Show Cause Notice, demanding payment of CENVAT credit under Rule 6(3) (i) being an amount equal to 8% / 6% of the value of exempted services, as the conditions of Rule 6(3A) were not followed.

Held:
The Tribunal after going through Rule 6(3A) of CENVAT Credit Rules,2004 observed that submission of details to department as prescribed in the said rule such as name, address and registration number etc. are mostly factual details which are available from record. It also noted that the department has not disputed the amount paid by the assessee before issue of notice as per Rule 6(3)(ii). In such circumstances, having regard to disparity of amount of CENVAT credit under both the options, it was held that It would be too harsh to enforce payment as per Rule 6(3)(i) only because of non-payment of the due amount on time as per procedure prescribed in Rule 6(3A). The Tribunal however further held that the conditions do require that option should be exercised in writing to avail the facility and amount of CENVAT credit attributable to exempted goods must be paid provisionally for every month.