No Simultaneous availment of Other options after choosing particular obligation under Rule 6 of CCR: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no simultaneous availment of other options after choosing particular obligation under Rule 6 of Cenvat Credit Rules (CCR), 2004.

M/s. Sify Technologies Ltd. (STL), the appellant was merged with M/s. Sify Communications Ltd. (SFL) in pursuance of the order passed by theHigh Court of Madras. After the merger, STL hasreceived input service which are used for exempt service and also taxable services. The appellant availed the facility under Rule 6(3)(ii) of Cenvat Credit Rules (CCR) 2004, for the period from April 2008 to March 2010, as theHigh Court’s order covered the period from 1.4.2008.

The Commissioner held that when the taxpayer has claimed that they are maintaining separate set of accounts for exempted and taxable services as per the option under Rule 6(2) of CENVAT Credit Rules, 2004, and are taking credit of only those input services used in taxable services for discharge of duty related to taxable services, they cannot simultaneously avail the option under Rule 6(3) for credit of common input services used for both exempted and taxable service.

Krithika Jaganathan, Advocate appeared on behalf of the appellant and K. Komathi, appeared for the Revenue.

The Counsel for the appellant contended that the obligation under Rule 6 are in the form of various alternatives and the assessee is free to choose any option; that once proportionate credit of input services used in exempted output services has been reversed, it tantamounts to not availing of credit of common inputs

The Coram consisting of P. Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical)observed that “An assessee cannot avail of the options under Rule 6(2) and 6(3) simultaneously. The obligations under Rule 6 are in the form of various alternatives and the assessee is free to choose any option. The assessee is under no compulsion to choose one option over the other. But once having chosen a particular option he cannot avail of the other option simultaneously.”

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