TaxTMI 
TaxTMI 
2016 (1) TMI 972
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.... services used in providing output services. During the relevant period i.e. April -September 2008, the value of the exempted services provided by the appellants is Rs. 20,31,62,113/-. The maintaining a separate account for input services used for taxable services and for exempted services. The appellants exercised the option provided in Rule 6(3)(ii) of the Cenvat Credit Rules, 2004. The appellants also filed the declaration as required under Rule 6(3A)(a) of the Cenvat Credit Rules, 2004 vide letter dated 07.05.2009. The appellants have already reversed the CEnvat credit of Rs. 5,06,736/- attributable to input services used in providing exempted services during the financial year 2008-09 along with the interest of Rs. 21,658/-. The balance in the cenvat credit account throughout the period under dispute was more than Rs. 5,06,736/-. A C.A. certificate to the effect is enclosed in appeal file. Though the appellants did not reverse the proportionate credit on monthly basis, but, such credit was not utilized during the said period. 2.1 A show cause notice dated 22.10.2009 was issued to the appellants which proposed to recover an amount equal to 8% of the value of exempted service....
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....ng output service on which service tax is payable. Sub-rule (3) of Rule 6 of the Cenvat Credit Rules, 2004 gives two options to the provider of output services, not maintaining a separate account. Rule 6(3)(i) of the Cenvat Credit Rules gives an option to the service provider to pay an amount equal to 8% of the value of exempted services. Rule 6(3)(ii) of the CENVAT Credit Rules, 2004, as amended from 1.4.2008, gives an option to the service provider to proportionately reverse the credit obtained on inputs and input services used for providing exempted services. Rule 6(3A) lays down the procedure which is to followed while exercising the option under Rule 6(3)(ii). Rule 6 (3A)(a) provides that the following information has to be intimated in writing to the Superintendent of Central Excise while exercising the option under Rule 6(3)(ii): (i) name, address and registration No. of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description of dutiable goods or taxable services; (iv) description of exempted goods or exempted services; ....
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....re made in the Budget for 1996-97, Rule 57CC was introduced which provided that in the existent system whenever the manufacturer clears the exempted final product, he is required to reverse the credit taken on inputs contained in the exempted final product. This provision is quite cumbersome and many a times, in the absence of any input-output correlation, it is difficult to determine whether the reversal of credit has been correct or not. In order to circumvent this problem, a provision was made by inserting a new rule 57CC so as to prescribe that an amount equal to 20% of the value of the exempted goods is reversed in the modvat credit account at the time of clearance of the exempted final product whether or not the inputs on which modvat credit has been taken is used or contained in the exempted final product. This was done to eliminate the problem of determination of input duty credit used or contained in the exempted final product. In the present case, the amount of input credit attributable to the exempted output service during the period is Rs. 5,06,736/- which has admittedly been reversed by making payment to the Revenue on 7.5.2009 along with filing of the appropriate decl....
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.... is beyond the mandate of giving credit under delegated legislation, namely, the Cenvat Credit Rules. Although Cenvat Credit Rules grant benefit of credit and it is perfectly legal to quote condition that credit of Service Tax paid on input services used or providing exempted service will not be available, but in the guise of putting such conditions, it is not open to the Revenue to state that even when the assessee is willing to forgo credit of Service Tax paid on input services used for providing exempted service, the same is not acceptable to the Revenue and the assessee should pay the amount equal to 8% of the value of exempted service, even if it is mentioned. 3.7 It is further urged that the Commissioner also erred in confirmation of the demand as during the period in dispute, the value of exempted service calculated by the appellant is Rs. 5,95,93,971/- instead of Rs. 20,31,62,113/- as arrived at vide the impugned order. It is further pointed out that the value of the taxable services exported at Rs. 26,97,076/- have been inadvertently included in the value of the exempted service. 3.8 The learned Counsel also relies on the ruling of the Rajasthan High Court in the cas....
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....rned Counsel further relies on the finding of the learned Commissioner for the subsequent period where in similar facts and circumstances, the learned Commissioner dropped the demand. Accordingly, the counsel prays for setting aside the impugned order with consequential relief. Revenue's Appeal No. ST/92/11 4.1 The learned AR urges that the Commissioner have erred in not considering the facts that to avail the benefits under Rule 6(3)(ii), the assessee is required to follow the procedure as laid down in Cenvat Credit Rules, the learned Commissioner has erred in allowing the benefit under Rule 6(3)(ii). Further reliance is placed on the furling of the Apex Court in the case of Commissioner of C. Ex vs. Harichand Shri Gopal - 2010 (260) ELT 3 (SC), wherein the facts were that the assessee was engaged in manufacture of excisable goods namely, preparation containing Chewing Tobacco falling under Heading 2404.40 chargeable to nil rate of duty, which was made leviable of Central Excise duty w.e.f. 1.3.1994. The Revenue came to know that the assessee had been manufacturing the said goods without applying/obtaining the certificate of registration as required under Rule 174 of ....
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....uch credit was admittedly not utilized during the said period. It is further urged that the learned Commissioner has erred in not considering the fact that the condition cannot be held to be procedural and these are mandatory in nature. 4.3 Further, reliance is placed on the ruling of this Tribunal in the case of Golden Dew Tea Factory Vs. Commissioner of Central Excise - 2009 (15) STR 358, wherein the issue before the Tribunal was whether the benefit of exemption under Notification NO. 41/94-CE will commence only from the date of receipt of undertaking by Assistant Commissioner/Dy. Commissioner of Central Excise or whether it also covers the period prior to the said date in respect of Tea cleared by a factory belonging to the Cooperative Society or by a bought-leaf factory during any financial year subsequent to 1999-2000. The condition given in the notification provided that the benefit of exemption from duty will commence from the date of the undertaking when the AC/DC of Central Excise, as specified in condition (b), which provided that :- The manufacturer files an undertaking, that:- (i) the green leaf used by the factory during the period on and from 10 t....
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....of goods cleared without payment of duty under the provisions of that rule. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely:- (i) the manufacturer of goods shall pay an amount equal ....
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....ue to reasons that no dutiable goods/taxable services were provided in the preceding financial year, then such manufacturer or provider of service is not required to determine and pay such amount provisionally for each month, but shall determine the CENVAT Credit attributable to exempted goods or exempted services for the whole year as prescribed in condition (c) and pay the amount so calculated on or before 30 th June of the succeeding financial year. Clause (i) further provides that if the amount so determined is not paid within the due date i.e. 30 th June then in addition to the said amount, the assessee shall be liable to pay interest @24% per annum from the due date till the date of payment. 6.2 Thus, it is evident that the condition of filing the declaration is only directory and not mandatory. Further, most of the requirements under Rule 6(3A) like, name, address and registration no. of the assessee, description of taxable services and exempted services, CENVAT Credit of inputs and input services lying in balance as on the date of exercising option, are already available in the records of the Revenue. We further find it is an admitted fact that the assessee herein have c....