2022 (4) TMI 423 - AT - Central Excise

Tribunal allows appeal despite procedural lapse, credits reversal upheld.

Ami Lifesciences Pvt Ltd Versus C.C.E. & S.T. -Vadodara-I

The Tribunal set aside the demand for payment of 6% of the value of exempted goods due to the appellant's non-filing of a declaration for opting of ... CENVAT Credit - common inputs and input services which have been used in the manufacture of dutiable and exempted goods - non-maintenance of separate records - requirement to pay 5%/10% as per Rule 6(3)(A) of Cenvat Credit Rules, 2004 - HELD THAT:- It is not in dispute that the appellant have admittedly reversed the proportionate credit. Therefore, reliance placed on Hon’ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [1995 (12) TMI 72 - SUPREME COURT], reversal of Cenvat Credit shall amount to non-availment of Cenvat Credit, if this be so, then Rule 6 is not applicable. Alternatively, once, the appellant have reversed the Cenvat Credit proportionately, they have opted for the reversal of proportionate credit then the Revenue cannot insist for some other option which the appellant has not opted for - As regard, non-filing of the declaration, which is only the procedural requirement. Due to lapse of procedural requirement, substantial benefit of proportionate reversal of Cenvat credit cannot be objected to. From the details asked for in the declaration, it is found that the same is otherwise available with the department, therefore, even if the details were not declared in the prescribed form but the details are otherwise required to be declared in the form are otherwise available with the department, therefore, mere non filing of declaration cannot be the reason that the appellant’s option for the proportionate reversal is not available. No further payment can be demanded from the appellant - Appeal allowed - decided in favor of appellant. Issues:1. Whether non-filing of a declaration for opting of proportionate reversal of credit under Rule 6(3)(A) of Cenvat Credit Rules, 2004, renders the appellant liable to pay 6% of the value of exempted goods.2. Whether the procedural lapse of not filing a declaration can be condoned if the appellant has reversed the proportionate credit on the due date.3. Whether the appellant's option for proportionate reversal of credit is valid even without filing the declaration.Analysis:1. The appellant, engaged in manufacturing pharmaceutical goods, availed Cenvat Credit for common inputs used in manufacturing both dutiable and exempted goods. The department demanded 6% of the value of exempted goods due to the appellant not filing a declaration for opting of proportionate reversal of credit. The Commissioner (Appeals) upheld the demand, citing non-compliance with Rule 6(3)(A) of Cenvat Credit Rules, 2004.2. The appellant argued that the procedural lapse of not filing the declaration should be condoned since they reversed the proportionate credit on time. The appellant relied on various judgments to support their stance. The Authorized Representative contended that without filing the declaration, the appellant cannot avail the option of proportionate credit, citing relevant case laws.3. The Tribunal analyzed the submissions and records, noting that the appellant had indeed reversed the proportionate credit. Referring to the Supreme Court's decision in a previous case, the Tribunal held that once the credit is reversed, the Rule may not be applicable. The Tribunal emphasized that the non-filing of the declaration was a procedural requirement, and the essential details were available with the department. Therefore, the Tribunal concluded that the appellant's option for proportionate reversal of credit was valid, and no further payment could be demanded.In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment highlighted that the appellant's reversal of proportionate credit, despite the procedural lapse of not filing a declaration, was valid.