Tribunal Allows Appeal, Sets Aside Order. Upholds Compliance with Cenvat Credit Rules.

The Tribunal allowed the appeal filed by the appellants, setting aside the order of the adjudicating authority. Citing the case of M/s Mercedes Benz India (P) Ltd vs CCE, Pune-I, the Tribunal held that the demand confirmed was not sustainable as the appellants had substantially complied with the provisions of Rule 6(3)(ii) of the Cenvat Credit Rules, 2004. The appellants' option under Rule 6(3) was upheld, emphasizing that the Revenue cannot dictate a specific choice.

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Issues Involved:
1. Non-maintenance of separate accounts for inputs and input services.
2. Non-payment of 10% of the value of exempted goods.
3. Non-compliance with Rule 6(3A) of the Cenvat Credit Rules, 2004.
4. Validity of the intimation and declaration filed by the appellants.
5. Adjudicating authority’s confirmation of demand and imposition of penalty.

Detailed Analysis:

1. Non-maintenance of separate accounts for inputs and input services:
The appellants, manufacturers of Paper and Sulphuric Acid, did not maintain separate accounts for inputs and input services used for both exempted and dutiable goods as required under the Cenvat Credit Rules, 2004 (CCR, 2004). This led to the issuance of show cause notices by the Revenue.

2. Non-payment of 10% of the value of exempted goods:
The appellants were also accused of not paying the amount equal to 10% of the value of the exempted goods. The Revenue argued that the appellants neither maintained separate accounts nor paid the required amount or followed the procedures under Rule 6(3A) of the CCR, 2004.

3. Non-compliance with Rule 6(3A) of the Cenvat Credit Rules, 2004:
The Revenue contended that the amounts reversed by the appellants were not as per the formula prescribed in sub-rule (3A)(b) of Rule 6 of the CCR, 2004. Additionally, the appellants did not determine and pay the amount provisionally on a monthly basis as required under Rule 6(3A).

4. Validity of the intimation and declaration filed by the appellants:
The appellants argued that they had filed a declaration regarding the option under Rule 6(3)(ii) of CCR, 2004, effective from 01.04.2008, which was acknowledged by the Superintendent of Range Office, Barnala. The Revenue’s objection that the letter was not given to the dealing hand was found to be frivolous as the receipt of the letter in the Range Office was not contested. The Tribunal found that the intimation regarding closing balances submitted within three days of filing their option was done within a reasonable period, and the Revenue’s contention regarding late filing was untenable.

5. Adjudicating authority’s confirmation of demand and imposition of penalty:
The adjudicating authority confirmed the demands and imposed equivalent penalties, adjusting the amounts already reversed by the appellants. However, the Tribunal found that the appellants had substantially complied with the provisions of Rule 6(3)(ii) of CCR, 2004. The Tribunal referenced the case of M/s Mercedes Benz India (P) Ltd vs CCE, Pune-I, where it was held that the assessee has the liberty to choose the option under Rule 6(3) and that the Revenue cannot insist on a particular option. The Tribunal concluded that the demand confirmed by the adjudicating authority was not sustainable.

Conclusion:
In view of the findings and by following the judgment in the case of M/s Mercedes Benz India (P) Ltd vs CCE, Pune-I, the Tribunal set aside the order of the adjudicating authority. The appeal filed by the appellant was allowed, with the operative part pronounced in the court.

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