TaxTMI 
TaxTMI 
2019 (1) TMI 175
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....se services are used for mining as well as manufacturing process carried at factory. Accordingly, SCN dated 29.03.2011 was issued to the appellant for the period March 2006 to March 2010, alleging that the Low Grade Bauxite is an exempted product under Notification No. 4/2006-CE. Since the appellant had availed cenvat credit in respect of common input service which are used for both dutiable and exempted product the appellant is required to pay an amount @ 10%/ 5% of the value of exempted goods in terms of Rules 6(3) of Cenvat Credit Rules, 2004 for the period 2005-2006 onwards. Similar SCNs were issue for the subsequent periods. The adjudicating authority i.e. Commissioner vide various orders confirmed the demand along with interest and penalty. Aggrieved by the said orders, the appellant filed different appeals. The department has also filed two separate appeals with respect to reduce penalty. The details of all the appeals are given as under:- S. No. Appeal NO. Period Amount Penalty Appeal filed by 1 E/10266/2014-Ex(DB) Mar. 06 to Mar 10 11,39,22,977/- 11,39,22,977/- Assesse 2 /2014-Ex(DB) Apr. 10 to Mar 11 20,788/- 20,788/- ....
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....the appellant is only required to reverse the credit availed in respect of trading activity. Similarly in this case also the assesse are only required to reverse the proportioned amount of common credit which were utilized for both the activities, namely, mining and also process carried out in the factory. 5. He also submits that even in respect of Rule 6 it has been consistently held that only proportionate credit is required to be reversed in the following judgments: (a) Commissioner of Central Excise, Mumbai Vs. IVP Ltd, 2017 (349) ELT 18 (BOM) (b) Shree Rama Multi Tech Ltd Vs. Union of India 2011 (267) ELT 153 (Guj) 6. As per the above judgments the same principal can be applied for reversal of credit attributable to use of input services in mining area. As per Ld. Commissioner finding in para 17 of the order that subsequent reversal of credit does not amount to compliance of provisions of rule 6(1). In the following judgment it has been consistently held that subsequent reversal of credit is equivalent to non-availment of the credit. (a) Hello Minerals Water (P) Ltd Vs. Union of India 2004 (174) ELT 422 (All.) (b) CCE V/s Ashim Dyecot Ltd 2008 (12) ARE 701 (G....
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....T order in the case of IBM India Pvt Ltd vide No. 20300/2015 dated 11th February 2015 wherein it has been held that credit reversal is not required to be made in case of input services which are used exclusively for dutiable services. He further submits that Rule 6 was amended w.e.f 01-04-2016 to clearly provide that proportionate reversal of credit shall be computed for common credit only. He referred to CBEC DOF letter No. 334/8/2016-TRU dated 29-2-2016. He submits that right from the beginning though the Rule has been amended from time to time but the intention of the legislature was that if the proportionate credit attributable to the exempted goods/ services made, no further demand can be raised. In the present case the appellant have already reversed the entire amount of the common credit and intimated the same to the department from time to time. He relied upon the judgment of Hon'ble Gujarat High Court in the case of Maan Pharmaceuticals 2011 (263) ELT 661 (Guj.) and Maize Products 2009 (234) ELT 431 (Guj.) wherein it was held that when entire credit is reversed, the provision of rule 6 does not apply. The department's appeal to Supreme Court against order of High Court in ....
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....equired 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 for payment of 5% of the sale value of exempted goods is provided as one of the option given in Rule 6(3) of Cenvat credit Rules which is reproduced below :- RULE 6. Obligation of a manufacturer or producer of final products and a [provider of output service. - (1) The CENVAT credit shall not be allowed 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 tha....
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....y on inputs under sub-clauses (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 any duty of excise is paid on the exempted goods, the same shall be reduced from the amount payable under clause (i) : Provided further that 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 per cent.] 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....
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....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(3)(ii) and paid an amount as required under sub-rule (3A) of Rule 6. As regard the compliance 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 was required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided under sub-rule (3A) of Rule 6, therefore to fulfill 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 intere....
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....ll 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, something that may be or is chosen, choice, the act of 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 ens....
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....of noncompliance of procedure and condition. Therefore the judgments cited by the ld. A.R. are not applicable. 6.1 In view of these observations, we are of the considered view that demand confirmed by the adjudicating authority has no legs and therefore the same cannot be sustained. The impugned order is set aside and Appeal is allowed." 12. Dealing with similar issue in the case of Sahyadri Starch & Industries Pvt. Ltd. vide Final order No. A/85556/2016-DB dated 04.02.2016 passed the following order. 13. In view of the above judgment, we are of the considered view that once the appellant have opted reversal of the credit in respect of service attributed to the exempted goods and in case of delay, the interest is also paid then the demand of 5% / 10% under Rule 6(3) cannot be made. In the present case since the Ld. Commissioner has demanded 5% / 10% of the value of exempted goods, he has not verified the correctness of actual cenvat credit attributed to exempted goods as reversed by the assesse. Therefore, only for the purpose of verification of such quantification of reversal, the matter in case of assessee's appeals is remanded to the original authority. As regard the Re....
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....he 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(3)(ii) and paid an amount as required under sub-rule (3A) of Rule 6. As regard the compliance 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 was required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided....
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.... 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 no condition provided in the rule that if a particular option, out of three Document 3 Appeal No.E/220/12 options are not opted, then only optin 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, something that may be or is chosen, choice, the act of 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." t is clear from the above decision that Revenue is not at liberty o impose any of the options given in Rule 6 (3) of Cenvat Credit R....