TaxTMI 
TaxTMI 
2019 (4) TMI 169
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....nputs in the nature of lubricants, welding electrodes and metal cutting gas. They also availed input service credit on Manpower Recruitment and Supply Agency Service, Maintenance and Repair Service, Material Handling Service and Business Auxiliary Service. These inputs and input services were used both in the manufacture of dutiable products as well as exempted goods. The appellants have not maintained separate accounts for the common inputs / input services as required under sub-rule (3) of Rule 6 of Cenvat Credit Rules, 2004. The department was of the view that the appellants had not exercised option to pay proportionate credit on inputs / input services used in manufacture of exempted goods and therefore is liable to pay an amount of Rs. 7,92,25,071/- which is equal to 10% or 5% (as applicable) on the value of metallurgical coke which is the exempted product manufactured by the appellants. Show cause notice was issued proposing to recover the irregularly availed credit along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand of Rs. 7,92,25,071/- along with interest and also imposed equal penalty. The amounts alrea....
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....hem. The worksheet for such reversal also was submitted along with that letter. Later, vide letter dt. 26.12.2011, the appellants had informed that they had reversed the cenvat credit on inputs / input services attributable to he exempted goods (metallurgical coke) for the period July 2008 to February 2011. They also furnished computation of the reversal amount made by them. He thus pointed out that vide the above letters, the appellants had reversed the entire credit attributable to electricity as well as exempted products. 3.2 As per sub-rule 3(ii), the manufacturer of goods or the provider of output service shall pay an amount equivalent to the cenvat credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods. Explanation I states that if the manufacturer intends to avail the option under sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. It is thus argued by the Ld. counsel that when the appellants vide letter dt. 20.07.2009 had informed the depa....
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....Structural Engineers Vs CCE Bangalore - 2017 (347) ELT 112 (Tri.- Bang.). 3.4 Ld. Counsel also argued on the ground of limitation. He submitted that appellants had intimated the department in 2009 as well as 2011 regarding the reversal of credit on common inputs / input services. However, show cause notice has been issued invoking the extended period only on 22.05.2013. When the appellants themselves have intimated the department with regard to credit attributable to exempted goods, the allegation that appellants have suppressed the facts with intention to evade payment of duty / tax is without any factual basis. The circular of the Board No.868/6/2008-CX dt. 09.05.2008 was relied upon by the counsel to clarify that when the assessee opts for reversing the credit attributable to exempted goods, the said option is required to be made for all exempted goods manufactured by him. Here the appellant has intimated the department in 2009 that they are reversing the credit attributable to electricity. Therefore the said case laws would be applicable to the common inputs and input services used for manufacture of metallurgical coke. He prayed that the impugned order may be set aside. 4.1 ....
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....tion, the demand confirmed alleging that the appellant has to pay 5% / 10% of the value of exempted goods (metallurgical coke) is legal and proper. 4.2 Countering the arguments on limitation, Ld. A.R submitted that the appellant has not reversed the credit on monthly basis and has reversed it only on 05.12.2011. The wrong availment of credit would not have come to light but for the interference of the department. Therefore, the invocation of extended period is legal and proper. 5. Heard both sides. 6.1 For better appreciation, the relevant provisions of law are reproduced as under :- "RULE 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. - (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted service, 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 provisio....
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.... Pertains to an assessee opting not to maintain separate Cenvat credit accounts for dutiable and exempted outputs. Such assessee has to opt for one of the following two options : (i) Pay an amount equal to 10% of the value of the exempted goods or 8% of the value of the exempted services. Exempted service includes non-taxable service also. OR (ii) Pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in or in relation to manufacture of exempted goods or for provision of exempted services. Rule 6(3A) prescribes the conditions and procedure to determine the amount of CENVAT credit attributable to exempted outputs. Schemes under rule 6(3) are optional and each individual scheme is comprehensive and self-contained. An assessee can exercise the option in relation to all his activities as an assessee and the option is not available only in relation to a part of his activity and the option once exercised cannot be withdrawn during the said financial year. 2. Requests have been received from various trade and industry 2. associations seeking clarifications on certain doubts relating to these amendments. Similar references have also been received ....
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....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, 2004, in accordance to which, the appellant are supposed to an amount equivalent to Cenvat Credit on input service attributed to the exempted service in terms of Rue 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(3)(ii) and paid an amount as required....
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....ly 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 be 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, something that may be or is chos....
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....assessee, who is not able to maintain separate accounts for common inputs / input services used, shall not avail cenvat credit on the inputs / inputs services used in manufacture of exempted goods. In the present case, appellants have informed vide their letter dt. 20.07.2009 that they intend to reverse cenvat credit on monthly basis on the inputs / input services used for production of electricity that is wheeled out to TNEB. As per the Explanation I of the said rule, the said option once exercised would be applicable to all the exempted goods manufactured by the appellant. On such score, the letter given by the appellant would be sufficient intimation to the department that they intend to avail the option stated in sub-rule 3 (ii) of Rule 6 of CCR 2004. 6.6 Similar facts has been analysed by the Tribunal in the cases relied upon by Ld. Counsel for appellants. In the case of Reliance Life Insurance Co. Ltd. Vs CST Mumbai (supra), it was held that Revenue cannot insist the assessee to avail a particular option and that Rule 6 (3) (i) cannot be made automatically applicable on failure by the assessee to intimate in writing about option to be availed the assessee. The relevant parag....