AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1379
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere not entitled to follow the procedure of Rule 6(3)(ii) and were therefore bound to follow the procedure of 6(3)(i) i.e. reversal of Cenvat credit @ 10% of the value of exempted goods. In the adjudication the demand of 10% of the value of the exempted goods, which comes to Rs. 25,65,592/- was confirmed for the period November, 2008 to June, 2009. This amount is the difference of amount between 10% of the value of exempted goods and actual Cenvat credit reversed by the appellant. Apart from confirmation of the aforesaid demand, interest under Section 11AB also demanded, however penalty proposed under Rule 15(a) was dropped. The appellant, being aggrieved by the adjudication order, filed appeal before the Commissioner(Appeals) which came to be rejected, therefore the appellant is before me. 3. Shri. J.H. Motwani, Ld. Counsel for the appellant submits that appellant have been reversing Cenvat credit attributable to input used in the exempted goods on regular basis therefore appellant have opted for the provision made under Rule 6(3)(ii). This practice was being followed by the appellant even prior to 1/4/2008 from which the amended provision brought by the Notification No. 10/08-CE....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. The department has no say that which option has to be availed by the assesse. In the present case the appellant have opted for payment of proportionate Cenvat credit in terms of Rule 6(3)(ii) of Cenvat Credit Rules, 2004, which in my considered view is not incorrect. At the most if any lapse is there that is, appellant have not given written option to the department. In my view it is only a procedural lapse and for such procedural lapse, appellant cannot be fastened with demand of 10% of the exempted goods. This Tribunal has dealt with the absolutely identical issue in case of M/s Mercedes Benz India (P) Limited Vs Commissioner Of Central Excise, Pune-I [2015-TIOL-1550-CESTAT-MUM], wherein it was held: 5. We have considered the submissions made by both sides. From the facts and circumstances of the case and arguments put forth by rivals, we find that the issue to be decided by us is whether appellant is required to pay 5% of total sale value of the goods traded by them in terms of Rule 6(3)(i) when the appellant paid the actual credit attributed to the quantum trading sale in terms of Rule 6(3A) alongwith interest following the option available under Rule 6(3)(ii). Provisions f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ir clearance upto the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b).] [(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 [any one] of the following options, as applicable to him, namely:- [(i) pay an amount equal to five per cent of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in clause (a) of sub-rule (2), take CENVAT credit only on inputs under subclauses (ii) and (iv) of said clause (a) and pay an amount as determined under sub-rule (3A) in respect of input services. The provisions of sub-clauses (i) and (ii) of clause (b) and sub-clauses (i) and (ii) of clause (c) of sub-rule (3A) shall not apply for such payment: Provided that if an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sal of the said letter, we observed that the appellant categorically stated in the said letter that payment of Cenvat Credit which they have made alongwith interest is in accordance with Rule 6 (3A) of Cenvat Credit Rules. With this act of the appellant, it is clear that the appellant opted for the option as provided under Rule 6(3)(ii) of the Cenvat Credit Rules, 2012, in accordance to which, the appellant are supposed to an amount equivalent to Cenvat Credit on input services attributed to the exempted service in terms of Rule 6(3A). In the present case, the appellant has availed Cenvat Credit in respect of common input services, which has been used in relation to the manufacture of the final product as well as for trading of bought out cars. Therefore they are supposed to pay an amount equivalent to Cenvat Credit which is attributed to the input service used for exempted service i.e. sale of car. In our view, three options have been provided under rule 6(3) and it is up to the assessee that which option has to be availed. Revenue could not insist the appellant to avail a particular option. In the present case the appellant have admittedly availed option as provided under Rule 6(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der their letters has admittedly been submitted, we are of the view, as regard this compliance of Rule 6(3A), it stood made. 5.3 As regard the contention of the adjudicating authority that this option should be given in beginning and before exercising such option, we are of the view that though there is no such time limit provided for exercising such option in the rules but it is a common sense that intention of any option should expressed before exercising the option, however the delay can be taken as procedural lapse. We also note that trading of goods was considered as exempted service from 2011 only, thus it was initial period. We are also of the view that there is no condition provided in the rule that if a particular option, out of three options are not opted, then only option of payment of 5% provided under Rule 6(3)(i) shall be compulsorily made applicable, therefore we are of the view that Revenue could not insist the appellant to avail a particular option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6(3)(ii). The meaning of the option as argued by the Ld. Sr. Counsel is that "option of right of choosing, somet....