Binding exercise of Cenvat reversal option bars mid-year switch to another compliance mode and refund claim.

Rule 6(3) of the Cenvat Credit Rules permits alternative modes of compliance for exempted goods, but Explanation 1 makes the chosen option binding for the financial year. An assessee that voluntarily reversed Cenvat credit on a proportionate basis could not later withdraw that option mid-year and claim refund on the footing that it should instead have paid 5%/10% of the value of exempted goods under the other available mode. The cited precedent was treated as factually distinct. The refund claim was therefore held inadmissible, and the rejection of refund was sustained.

---

---

Issues: Whether an assessee who had voluntarily opted for proportionate reversal of Cenvat credit under Rule 6(3)(ii) of the Cenvat Credit Rules, 2004 could later claim refund by asserting that it ought to have paid 5%/10% of the value of exempted goods under the alternative option in Rule 6(3).

Analysis: Rule 6(3) permits alternative modes of discharge in relation to exempted goods, but Explanation 1 makes the exercise of an option binding for the financial year. The assessee had itself reversed credit on a proportionate basis, which was consistent with the chosen option. Once that option was exercised, it could not be withdrawn during the remaining part of the financial year to switch to the other mode and seek refund of the differential amount. The cited precedent was found inapplicable because it arose in a different factual setting.

Conclusion: The refund claim was not admissible and the assessee's appeal failed.

Final Conclusion: The order rejecting refund was sustained, and the challenge to the demand-related reversal did not succeed.

Ratio Decidendi: Where Rule 6(3) of the Cenvat Credit Rules, 2004 gives alternative modes of compliance, the option validly exercised for a financial year cannot be withdrawn mid-year to claim refund on the basis of a different option.

---