cenvat rule 6(3A) procedure lapse

[satbir singhwahi]

During audit by Service tax dept , the procedure lapse of non intimation to dept. has been detected. Whether proportionate cenvat can be allowed after reversal of cenvat on exempted services.Dept . insisting for full cenvat disallowance.

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have exercised the option under Rule 6(3)?

[satbir singhwahi]

Sir

There is procedure lapse , no intimation to dept done.

[DR.MARIAPPAN GOVINDARAJAN]

You may now give option under Rule 6(3) and give the details of intimation as under Rule 6(3A) and sought for condonation of delay as it is not wanton. Even if the department issues show cause notice it will give weightage. In the meantime you may reverse the credit proportionately and pay also interest for the same. In the reply you can contend for proportionate CENVAT credit.

[satbir singhwahi]

Thanks Sir

Whether Audit party will allow proportionate credit ? Pls give, if any ruling or case law to claim proportionate cenvat in case of procedure lapse.

[DR.MARIAPPAN GOVINDARAJAN]

It is up to you to challenge on your own. There is no case law in this regard to the best of my knowledge.

[satbir singhwahi]

Thanks Sir

[DR.MARIAPPAN GOVINDARAJAN]

Ok good luck

[Ganeshan Kalyani]

Penalty may be proposed to impose as ignorance of law is not an excuse.

[Himansu Sekhar]

The assessee has the option of following the procedures of rule 6(3)(I) or (ii) . if no declaration filed for either of the options, then department may ask for sequential observance of the provisions. Hence they may ask for reversal of 6% of the value of exempted services.

[Himansu Sekhar]

May refer the Hon,blue APex court decision - chandrapur magnet wire

[KASTURI SETHI]

SCN will be issued for non-reversal as well as non intimation. Now ball is in the court of the department and not in the hands of asseessee.

[KASTURI SETHI]

Dear Querist,

This case law may be relevant for you.

2017 (347) E.L.T. 112 (Tri. - Bang.) = 2016 (8) TMI 387 - CESTAT BANGALORECRANES & STRUCTURAL ENGINEERS Versus COMMR. OF C. EX., BANGALORE-I

[satbir singhwahi]

Thanks Sir for this case law.

[KASTURI SETHI]

Welcome Sir.

AI Summary

Procedure lapse under CENVAT rules: exercise statutory option, intimate belatedly, reverse proportionate credit and seek condonation. Procedure lapse for failure to give notice under Rule 6(3) and intimation under Rule 6(3A) can be addressed by exercising the Rule 6(3) option, filing the Rule 6(3A) intimation with a request for condonation of delay, reversing CENVAT credit proportionately and paying interest, and then contesting for proportionate credit in departmental proceedings; the department may still issue show cause notices, propose penalties, or insist on full disallowance.