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Assessee not required to deduct 8% from sale price for payment under Rule 6(3)(b) The Appellate Tribunal CESTAT Mumbai held that an assessee is not obligated to deduct 8% from the sale price of exempted goods for payment under Rule ...
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Assessee not required to deduct 8% from sale price for payment under Rule 6(3)(b)
The Appellate Tribunal CESTAT Mumbai held that an assessee is not obligated to deduct 8% from the sale price of exempted goods for payment under Rule 6(3)(b). The Tribunal relied on a previous decision by the Larger Bench in a similar case, establishing that such deduction was not required. Consequently, the demand for cenvat credit was upheld with interest, but the penalty under Rule 13 was set aside due to the lack of suppression of facts and the issue being debatable and resolved by the Larger Bench. The appellant's appeal was partly allowed.
Issues: Interpretation of Rule 6(3)(b) - Requirement to deduct 8% from sale price of exempted goods for payment of 8%.
Analysis: The judgment by the Appellate Tribunal CESTAT Mumbai addressed the issue of whether an assessee is obligated to deduct 8% from the sale price of exempted goods for the payment of 8% under Rule 6(3)(b). The appellant argued that a similar issue was decided against them in a previous case, but they had filed an appeal in the High Court, which was pending. The appellant contended that they had informed the department about the deduction of 8% for payment under Rule 6(3)(b) and had disclosed this in their monthly ER-1 return. The appellant maintained that there was no malafide intent as they had paid the 8% after deducting 8% considering it as tax. The appellant relied on a previous case where a penalty was set aside. The revenue representative reiterated the findings of the impugned order. The Tribunal examined the submissions and records and noted that the Larger Bench had already decided a similar issue in the case of Kriti Industries (I) Ltd., ruling that the 8% was not required to be deducted from the sale price of exempted goods for payment purposes. Therefore, the issue was no longer open for debate. The Tribunal rejected the request to keep the matter in abeyance as there was no stay on the order and the issue had been settled by the Larger Bench. Consequently, the demand for cenvat credit was upheld along with interest, but the penalty under Rule 13 was set aside as there was no suppression of facts and the issue was debatable and had been resolved by the Larger Bench. The Tribunal held that the appellant was not liable for the penalty under Rule 13, modifying the impugned order accordingly and partly allowing the appeal.
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