TaxTMI 
TaxTMI 
2015 (8) TMI 24
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....said demand. 26.2 I order recovery of interest on the amount of demand confirmed in Para 26.1 above, under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944. I further order appropriation of the amount of Rs. 20,993 /- already paid by the assessee vide PLA Entry No. 273, dated 13/3/2012 against the aforesaid demand of interest. 26.3 I further impose a penalty of Rs. 24,71,93,529 /- on the assessee, i.e. M/s. Mercedes Benz India (P) Ltd. Chakan, Pune under the provisions of Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. 27. I give an option to the assessee i.e. M/s. Mercedes Benz India (P) Ltd. Chakan, Pune under Section 11AC(1)(C) of Central Excise, Act, 1944, to pay 25% of the penalty amount as imposed in para 26.3 above, provided the assessee pays the entire amount of demand confirmed in para 26.1 above, alongwith interest payable thereon as ordered in para 26.2 above as well as the reduced 25% penalty imposed under Section 11AC ibid, within thirty days of the date of communication of this order. 2. The fact of the case is that appellant, ....
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....n 75 of the Finance Act, 1994 vide PLA entry No. 273/13.03.2012 and intimated the same vide their letter dated 14/3/2012. 2.3 The show cause notice was issued wherein it was alleged that the appellant while reversed the amount of Cenvat Credit and paying the interest had not followed the procedure as laid down in sub rule 3A (a) and (b) of the said rules respectively, inasmuch as they had neither exercised these option by intimating the same in writing to the superintendent of central Excise giving required particulars nor have they determined and paid any amount provisionally for every months. Further this amount cannot be treated as final determination of the whole financial year as envisaged under sub rule 3A(c) of the said rule. Thus by not following laid down procedure as envisaged under sub rule 3A(c) of the said rule the appellant becomes liable to calculate and pay amount equivalent to 5% of the value on exempted services. 2.4 In view of the above allegation show cause Notice No. 35/P-V/R-CKN/COMMR/2012 dated 13/4/2012 proposed demand of Rs. 24,71,93,529/- which is equivalent to 5% of the value of traded goods i.e. Rs. 494,38,70,577/- on exempted services i.e. trading....
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....ulated reversal amount on their own in the month of February, 2012 and reverse the said amount on 13/3/2012 and interest of Rs. 20,993 /- was also paid on 13/3/12. Reversal of the credit was intimated to the department vide letter dated 14/3/2012. Ld. Commissioner, without considering ratio of turnover from manufacturing activity vis a vis trading activity has merely confirmed the demand at 5% of the total exempted turnover i.e. trading of imported cars which cannot be sustained and being completely perverse the impugned order is liable to be set aside. (c) Ld. Commissioner confirmed the demand equivalent to the 5% of the trading turnover despite admitting the fact that the appellant have reversed the required credit alongwith interest, mainly on the ground that appellant have not complied with the condition and procedure laid down under Rule 6(3)(ii) read with rule 6(3A) of CCR, Rules. The appellant submits that they have correctly exercised the option under Rule 6(3A) for reversing the credit under Rule 6(3)(ii). As per sub rule (3A) the assessee is required to intimate while exercising the option provided under Rule 6(3)(ii) to the Jurisdictional superintendent and the ....
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....gistration is available with the department. As regard the date of option, the appellant while reversing the credit under an intimation to the department clearly shown that date of option is from 1st April 2011, description of dutiable goods and exempted goods have also been intimated to the superintendent. (e) As regard the Cenvat Credit of input and input services lying in balance, the same has been declared by the appellant in their monthly ER1 return. Therefore, even if it is assumed, that these information have not been intimated to the superintendent under intimation the same were otherwise available with the department at all the time. Moreover the intimation has been given by the appellant vide their letter dated 14/3/2012, therefore, even if the intimation in the prescribed format was not given but information required therein was otherwise very much provided to the jurisdictional Central Excise authority. In view of this fact, it cannot be said that the appellant have not complied with the procedure as laid down. It is the submission of the Ld. Counsel that is not provided under the law that if there is any procedure infraction in availing the option of Rule 6(3)....
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....at credit attributable to the input services used in exempted services i.e. trading of motor vehicle but procedure was not followed inasmuch as in the beginning of the financial year, have not intimated in writing to the Jurisdictional superintendent regarding the availment of the option provided under clause (ii) of Rule 6(3). They have not furnished the information as provided under clause (i) to (v) of sub clause (a) of Rule 6(3A). 4.1 The appellant failed to calculate Cenvat credit to reversed on monthly basis, therefore the substantive requirement of procedure was not followed. It was time and again held by the Apex court that in order to avail any benefit provided under the statue, procedure and conditions prescribed thereto should be scrupulously followed and in absence of compliance of condition and procedure, the appellant renders themselves disentitle for the benefit of option provided under rule 6(3)(ii). Once the appellant became disentitle for this option, the other option available is under rule 6(3)(i), therefore appellant had no option except to follow the provision of Rule 6(3)(i) and accordingly they were required to pay 5% of the value of the exempted services....
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....d on such quantity of [input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services except, in the circumstances mentioned in sub-rule (2). [Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. [Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder.] [(2) Where a manufacturer....
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....t if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be [six percent.] of the value so exempted] [Provided also that in case of transportation of goods or passengers by rail the amount required to be paid under clause (i) shall be an amount equal to 2 per cent. of value of the exempted services.] Explanation I .- If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Ld. Adjudicating Authority demanded 5% of the total sale of the trading turnover of goods on the ground that option provided under Rule 6 (3) (i) is applicable on the ground that claim of the appellant on the option provided under Rule 6(3)(ii) is not available for the reason that appellant has not complied with condition provided under s....
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.... of the procedure and conditions as laid down for availing option as provided under sub rule (3) (ii), we find that foremost condition is that the appellant is required to pay an amount as per the formula provided under sub rule (3A) on monthly basis. However, we find that as per the provision, payment on monthly basis is provisional basis, therefore it is not mandatory that whole amount or part of the amount as required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided under Rule (3A) of Rule 6, therefore to fulfil the condition, assessee should pay the said amount, which has been complied by the appellant. 5.2 As regard the delay in payment, if any, the appellant have discharged the interest liability on such delay. Regarding the compliance as provided under Clause (a) of Sub Rule (3A) of Rule 6 the appellant while exercising this option is required to intimate in writing to the Jurisdictional Superintendent, Central Excise, the following particulars namely: (i) Name, address and registration No. of the manufacturer of goods or provider of output service; (ii) Date from which the option under....
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....f choosing". From the said meaning of the term 'option', it is clear that it, is the appellant who have liberty to decide which option to be exercised and not the Revenue to decide the same. 5.4 We find that the appellant admittedly paid an amount of Rs. 4,06,785 /- plus interest, this is not under dispute. Therefore in our view, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of Rs. 24,71,93,529/- of the total value of the vehicle amounting to Rs. 494,38,70,577/- sold in the market cannot be demanded. We are also of the view that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. It is also o....