Relief to IOC: Calcutta HC confirms Fulfilment of Obligation under Rule 6(2) of CCR, by taking only 85% of Credit on Common Input Service [Read Order]

IOC - Calcutta - HC - CCR - credit - input - service - TAXSCAN

The Calcutta High Court confirmed the fulfilment of obligation under Rule 6(2) of the Cenvat Credit Rules, 2004(CCR), by taking only 85% of credit on common input service, thereby granting relief to M/s Indian Oil Corporation Ltd, the petitioner.

The moot question involved in the appeal is whether the respondent has fulfilled his obligation under Rule 6(2) of the Cenvat Credit Rules, 2004 by taking only 85% of the credit on the common input service.

The revenue had issued show cause notice alleging that the assessee has cleared final products manufactured by them without payment of duty but failed to pay an amount equivalent to 10% of the price of final products which were manufactured by them.

It was alleged that the respondent/assessee did not maintain separate accounts for receipt, consumption and inventory of input and input services meant for use in the manufacture of dutiable and exempted goods or services and proportionate Cenvat Credit on such inputs has not been expunged for the period from March, 2007 to December, 2007 and the subject goods were cleared at the NIL rate of duty but exemption notification under which goods have been removed were not mentioned in the ER 1 returns submitted by the assessee.

It is pointed out by thecounsel for the revenue that after the order passed by the Tribunal, the Department has issued certain letters, and the assessee has also submitted reply and further communication has been sent to the assessee. These communications have been sent to the assessee for the period covered in CEXA/22/2022 and CEXA/24/2022.

The Court of Justices TS Sivagnanam and Hiranmay Bhattacharyya observed that “This would indirectly mean that the contest which was made before the Tribunal with regard to the Chartered Accountant’s certificate does not any longer survive and it is only the contents thereof, sufficiency or insufficiency of the material contained in the certificate which is now being pursued by the Department. Therefore, technically we would not be wrong in observing that the revenue has accepted that portion of the order passed by the Tribunal.”

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