2016 (7) TMI 988

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....lso held that demand of Rs. 1,93,60,400/- being amount payable @ 10% / 5% of the value of the exempted goods cleared under Notification Nos. 10/97-C.E. dated 1.3.1997, 6/2006-C.E. dated 1.3.2006 and 12/2012-C.E. dated 17.3.2012, is not recoverable from the assessees and, accordingly, dropped the said demand. The Commissioner in the impugned order also appropriated an amount of Rs. 5,18,94,953/-, which was paid / reversed by the appellant in their Cenvat credit account during the period September 2007 to June 2012. 3. The appellant has been represented by the learned advocate, Shri G. Shivadass. The appellant in their appeal and the learned advocate for the appellant, Shri G. Shivadass inter-alia argued as follows : (A) Demand of Rs. 13,78,91,547/- (i) The appellant for the period prior to March, 2008 has reversed an amount of Rs. 1,03,82,529/- towards the proportionate credit. (ii) The goods in question are cleared under Notification No. 63/1995-CE dated 16.3.1995, which is covered under Rule 6(3)(a)(vii). The provision provides that the assessees shall pay proportionate credit on inputs and input services. (iii) Rule 6(3)(b) provides for paym....

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....ut services. (ii) In any case, the demand is barred by limitation. 3.1. The learned advocate for the appellant further submitted as follows : (i) The appellant has maintained separate accounts in respect of exclusive inputs used in the manufacture of exempted final products and not availed credit on the same. (ii) The appellant has availed credit on certain common inputs and input services used in the manufacture of exempted final products and reversed the proportionate credit. (iii) The demand for the period prior to 30.03.2008 is covered by the retrospective amendment in terms of Section 73 of the Finance Act, 2010. (iv) The appropriation of proportionate reversal of credit in the impugned order amounts to acceptance of reversal of proportionate credit and hence, the question of demand @ 10% / 5% of the value of clearances of exempted final products in terms of Rule 6(3) of the CCR, 2004 does not arise. (v) Reliance is placed on the following decisions: Mercedes Benz Pvt. Ltd. v. CCE, Pune-2015 (40) STR 381 (Tri-Mum.) CCE vs. Himalaya Drugs - 2011 (271) E.L.T. 350 (Kar.) CCE, Salem v. Burn Standar....

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....o pay an amount equivalent to the Cenvat credit attributable to the inputs and input services used in the manufacture of exempted final products subject to the conditions and procedures specified therein and the appellant has neither exercised any such option nor followed the procedure prescribed under the provisions of Rule 6(3A) of the CCR, 2004. (iv) The appellant has deliberately suppressed the facts from the Department with intent to avail irregular credit. 5. We have carefully considered the facts on record and the submissions of both the sides. 6. We find that the total demand against the appeal is in three parts. These three parts are as follows : (A). The first part of the demand confirmed is Rs. 13,78,91,547/- for the period upto March, 2008 on clearance made under Notification No. 63/1995-C.E. dated 16.3.1995 as amended. (B). The second part of the demand confirmed is   Rs. 35,88,72,223/- with reference to clearance of the goods made during the period from April 2008 to June 2012, under Notification No. 63/1995-C.E. dated 16.3.1995 as amended. (C). The third part of the demand confirmed is Rs. 4,25,000/- with reference ....

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....able under Rule 6(3) of CCR, 2004 works out to Rs. 13,78,91,547/-." 7A.1 In this regard, the appellant has argued that they have reversed an amount of Rs. 1,03,82,529/- towards the proportionate credit. The appellant further argued that the goods were cleared under Notification No. 63/95-C.E., which has been covered under Rule 6(3)(a)(vii). The appellant states that the provisions of Rule 6(3) mentions that if the exempted goods are covered under Rule 6(3)(a)(vii) (which mentions the clearance of goods made under Notification No. 63/95-CE dated 16.3.1995), the assessee shall pay proportionate credit on inputs and inputs services. In order to make the matter more clear, we reproduce below the relevant provisions of Rule 6(3) of Cenvat Credit Rules, 2004, as prevalent during the period 2007 2008, which is the relevant period : "RULE 6 . Obligation of manufacture of dutiable and exempted goods and provider of taxable and exempted services.   .     .. .. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow eit....

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....d the submissions of the Department and the appellant, it is clear that this demand could theoretically be restricted only to the proportionate credit availed by the appellant on input services utilized for the goods cleared under exemption Notification No. 63/95-CE dated 16.3.1995 during the relevant period. However, we find that relevant period for the demand is from 1.9.2007 to 31.3.2008 and the Show-cause notice for the demand has been issued by the Revenue on 17.8.2012. Thus there has been a gap of more than four years, whereas normal period for demanding any short payment of duty, etc. is one year unless the Department could prove the following against the assessee : Fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of laws and rules concerning Central Excise/Service Tax, with intention to evade payment of duty. 7A.2.1 We find on record that the Revenue has failed to prove any fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of law and rules concerning Central Excise and/or Service Tax with an intention to evade payment of duty on the part of the appe....

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.... for the period prior to July 2011 is barred by limitation is a valid argument as there has not been any clear cut proof available to substantiate any kind of fraud or collusion or any willful mis-statement or suppression of facts or contravention of any provisions of laws concerning Central Excise and/or Service Tax with an intention to evade payment of duty on the part of the appellant for recovery of any short levy or short payment of duty for the period of five years from the relevant date. Here, the Show-cause notice has been issued on 17.8.2012. Therefore, any demand for the period prior to July 2011 is clearly barred by limitation as per the provisions of Section 11A(4) of Central Excise Act, 1944. Consequently, it is held that the Revenue can recover the demand only for the normal period of one year from the relevant date. During this normal period of one year, the demand would be restricted to reversal of the proportionate credit of input services. 7C. Demand of Rs. 4,25,000/- : As per the impugned order, the period involved is the months of November 2007 and August 2009, where the goods were cleared under exemption Notification No. 10/1997-C.E. 7C.1 Here, we find th....