2025-VIL-2132-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Reversal of Cenvat credit on exempted services, Calculation of Cenvat credit for reversal - Prior to March 2008, the appellant was availing and utilizing Cenvat credit on input services used in providing both taxable and exempted services, without restricting the utilization to 20% of the amount of service tax payable on the taxable output services, as required under Rule 6(3) of the Cenvat Credit Rules, 2004 – Disallowance of entire credit for wrong availment, along with interest and penalty - Whether the Cenvat credit of input services exclusively used for the provision of taxable services should be considered or only the Cenvat credit of common input services should be taken into account for the purpose of calculating the Cenvat credit to be reversed under Rule 6(3A) of the CCR, 2004 – HELD - For the purpose of calculation of credit reversal under the formula in Rule 6(3A), the "total Cenvat credit" shall mean the credit of only common input services and not the input services exclusively used for the manufacture of dutiable products, on which the Cenvat credit is eligible in its entirety – The Rule 6 of the CCR Rules, 2004 should be read harmoniously and conjointly, and it is clear that the "Total Cenvat Credit" for the purpose of the formula under Rule 6(3A) is only the total Cenvat credit of common input services, and will not include the Cenvat credit on input/input services exclusively used for the provision of taxable services. The interpretation of the Revenue, which would lead to the disallowance of Cenvat credit on input services used in the provision of taxable services, is not in line with the provisions of the CCR, 2004 - The impugned order is set aside and the appeal is allowed
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