Service Tax – 20% restriction under Rule 6(3) of the CENVAT Credit Rules 2004 not applicable to credit availed on capital goods

We find that as per the appellant, major amount of demand working out to Rs.12.07 crores pertains to capital goods credit utilised. We note that the Commissioner wrongly found that the restriction contained in Rule 6(3) of CCR as regards the use of cenvat credit above 20% of the tax paid applied to credit of capital goods also. In the circumstances, we set aside the impugned order and remand the entire case to the Commissioner for a fresh decision on all issues after hearing the assessee. The appeal is allowed by way of remand. Stay petiti

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