C.C.E. And C. vs Gujarat Narmada Valley Fertilizers ... on 12 December, 2000
In fact, the appellants also rely on this principle laid down by the Hon'ble Supreme Court. However, they have relied on this to state that sub-rule (1) should not be read in isolation. In the present case, we are faced with a situation where the appellants have common input / input services. For some of them, they followed sub-rule (2) and maintained separate accounts and for some others they have followed Rule 6 (3). Rule 6 (3) allowed credit on common input services notwithstanding the provisions of Rule 6 (1) or Rule 6 (2). The appellant's claim is that Rule 6 (2) and Rule 6 (3) can operate simultaneously. We are not in agreement with such proposition. Both sub-rule (2) and (3) of Rule 6 talks about "manufacturer" or "provider of output services". The said sub-rules do not talk about the service wise maintenance of accounts. It is with reference to "manufacturer or "provider of output service". As already noted, sub-rule (1) absolutely prohibits availing cenvat credit on input service which is used in the manufacture of exempted goods or exempted services except in the circumstances mentioned in sub-rule (2). In other words, it is very clear that plenary provision of sub-rule (1) is giving exception to a situation envisaged in sub-rule (2). Sub-rule (2) is for 'manufacturer' or 'provider of output service' who shall maintain separate accounts for receipt, consumption and inventory of input and input services meant for use in the manufacture of dutiable final products or in providing output service as well as exempted goods. A combined reading of provisions of Rule 6 makes it clear that cenvat credit shall not be allowed for input services used for exempted service except where the manufacturer using common input services, both for exempted as well as taxable output services maintains separate accounts in respect of consumption of such input services on which credit is availed.