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May 2016

[2016-TIOL-702-CESTAT-MUM] M/s Dwarkadas Mantri Nagri Sahakari Bank Ltd vs. Commissioner of Central Excise & Customs, Aurangabad

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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There are options available under Rule 6(3) of the CENVAT credit Rules, 2004 to reverse CENVAT credit. The department cannot determine the option to be followed by the Appellant on its own.

Facts
Appellant was engaged in providing taxable and exempted output services and had availed CENVAT credit of common input services. A show cause notice was issued to recover 6%/8% on the value of exempted services in terms of Rule 6(3)(i) of the CENVAT credit Rules, 2004 along with interest and penalties. It was argued that under Rule 6(3) there are options available to either reverse proportionate credit attributable to exempted services as per clause 6(3)(ii) or follow the aforesaid clause 6(3) (i) and thus the adjudicating authority cannot on their own determine the method to be followed. It was further submitted that entire CENVAT credit availed on common input services was paid along with interest and thus the demand is not sustainable.

Held
The Tribunal noted that entire credit on common input services was reversed along with interest under Rule 6(3) (ii) and therefore the demand of 6%/8% of the value of exempted goods shall not sustain. Further, it was held that the adjudicating authority may verify the quantum of CENVAT credit reversed.

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