Vertiv Energy Pvt. Ltd. Vs Commissioner of CGST & Central Excise (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, allowed the appeal filed by Vertiv Energy Pvt. Ltd. and set aside the Commissioner’s order confirming demands relating to CENVAT credit and service tax, along with interest and penalties. The Tribunal held that the demands on all three issues were unsustainable on merits.
The first issue concerned recovery of ₹12.36 crore under Rule 6(3) of the CENVAT Credit Rules, 2004 (CCR). The Department alleged that the appellant had not maintained separate records for taxable and exempted services and had availed CENVAT credit on common input services, requiring payment under Rule 6(3). The appellant contended that it had availed only proportionate CENVAT credit attributable to taxable services and had furnished voucher-wise details of service tax paid and credit availed. It also argued that Rule 6 provides multiple methods for complying with CENVAT credit obligations and that the Department could not compel an assessee to adopt a particular option. Relying on the Telangana High Court decision in Tiara Advertising, the Tribunal held that Rule 6 allows the assessee to choose the method of compliance, and nothing in the CCR permits tax authorities to make that choice on the assessee’s behalf. It further found that the appellant had availed only proportionate credit on common input services and had not taken any ineligible CENVAT credit. Consequently, the demand under Rule 6(3) could not be sustained.
