CESTAT order disposing stay application and holding that CENVAT reversal formula prescribed in Rule 6(3A) of CENVAT Credit Rules should be applied on total input servicws

This Tax Alert which gives an update on the recent stay order of Mumbai CESTAT in the case of Thyssenkrupp Industries (I) Pvt. Ltd. V. Commissioner of Central Excise, Pune [2014-TIOL-1825-CESTAT-MUM].

The issue dealt with in this order was whether the formula as prescribed in Rule 6(3A) of the CENVAT Credit Rules, 2004 for reversal of CENVAT credit should be applied to total CENVAT credit taken on input services received by the taxpayer or it should be only applied to CENVAT credit on common input services.

CESTAT decided in favor of Revenue and ordered pre-deposit, holding that the formula prescribed needs to be applied on total CENVAT credit taken on all the input services received by the taxpayer and accordingly, reversal for the purposes of Rule 6(3) needs to be done.