TaxTMI 
TaxTMI 
2016 (6) TMI 866
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.... claimed exemption of duty under Sl.No.84 of the Notification No.6/2006-CE dt. 01/03/2006 (Sl.No.13 of the list No.5). The department took the view that towers and tower parts cleared by appellants to M/s. RRB Energy Ltd. are not parts or components of WOEG and issued a show-cause notice proposing to deny the benefit of exemption under Notification No.6/2006-CE dt. 01/03/2006. After adjudication, the order-in-original dt. 27/01/2011 was passed where the proceedings were dropped. 2. In continuation, the department then issued another show-cause notice dt. 08/04/2010 alleging that the appellants though used common inputs and input services in the manufacture of finished goods cleared at nil rate of duty under exemption notification No.6/20....
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....nments and these services are used commonly. Under Rule 6(3) there are two options available to an assessee manufacturing dutiable and exempted products and not maintaining separate accounts for commonly used inputs / input services. The two options are (i) payment of 5% / 10% of amount on the sale price of the exempted goods or on the value of exempted services and (ii) proportionate reversal of credit on inputs and input services attributable to exempted goods / exempted services as per the formula prescribed under Rule 6(3A). The amount/duty payable by appellant under second option is Rs. 3,70,612/- as calculated by appellants. Whereas the amount payable under the first option will come to Rs. 24,55,364/-. The appellants chose the second....
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.... of reversal of proportionate credit as provided under rule 6(3)(ii) it was mandatory for them to intimate the department about their option. He alerted that the section uses the word shall and therefore the requirement to intimate the department in writing cannot be construed as directory. Without intimating the department about the option and not maintaining separate account, the appellants have chosen to reverse the credit and are now trying to take shelter contending that it is only a procedural lapse. That as the appellants have not intimated the department about their exercise of option they are bound to pay the duty amount as calculated under first option, Rule 6(3)(i), and that the demand of duty interest and penalty has been rightl....
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....ervice provider shall pay 8% (6% w.e.f. 07/07/2009) of the value of the exempted services; or b) reverse the credit on inputs and input services pertaining to exempted goods and exempted services as per the procedure and conditions prescribed in Rule 6(3A), and it also prescribes the formula for calculation of the proportionate credit to be reversed. 6. For better appreciation, relevant part of Rule 6(3A) is reproduced as under:- Rule 6(3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:- (a) while exercising this option, the manufacturer of goods or the pro....
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....imate the department about the option exercised, is mandatory and that on failure, the appellant has no other option but to accept and comply Rule 6(3)(i) and make payment of 5% / 10% of sale price of exempted goods / value of exempted services is not acceptable or convincing. The Rule does not lay down any such restriction. The procedure and conditions laid in Rule 6(3A) is intended to make Rule 6(3) workable and not to take away the option available to the assessee. In any case, at no stretch of imagination can it be said that on failure to intimate the department, Rule 6(3)(i) would automatically come into application. 7. In support of their arguments, the appellants have placed reliance on the judgment passed by co-ordinate Bench of ....