2020 (3) TMI 1053

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....tral Excise Act, 1944 (for short, 'the Act') against the order dated 10.8.2016 passed by the Customs, Excise & Service Tax Appellate Tribunal, Chandigarh (for short, 'the Tribunal') claiming following substantial questions of law: "(A) Whether the impugned order dated 10.8.2016, Annexure A-3 is based on surmises and conjectures and is therefore perverse and untenable in the eyes of law? (B) Whether the Ld. Tribunal failed to appreciate the evidence on record to presume that the inputs at the start of manufacture are available for credit and therefore irrespective of the fact that the goods which were finally cleared were exempted, the assessee would be entitled to benefit of Rule 6(3) of the Cenvat Credit R....

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.... were to be supplied subject to exemption under Notification No. 12/2012-CE dated 17.3.2012 and if the GMADA failed to get exemption certificate under the said notification, in that case duty was to be paid on the pipes. M/s Welspun Corporation Ltd. (for short, 'WCL') acquired a unit in July, 2012 and started manufacturing of pipes. WPL placed the order on 20.7.2012 to WCL for the pipes which were to be supplied by it to GMADA. On 20.8.2012, GMADA obtained an exemption certificate. On 5.11.2012, WPL placed another order to WCL for supply of pipes and on the supply duty was leviable. It would be worth taking note at this stage that both the orders were for supply of HSAW pipes 2250 mm D 12 mm wall thickness. The period in dispute is ....

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....s. A feeble attempt was made to argue that the conduct in availing cenvat credit was malafide and the order placed in November, 2012 for supply of pipes leviable to duty was merely with the intention to get benefit of Rule 6. However, the said allegation of malafide or fraud could not be substantiated by the material on record. For reference, Rule 6(1) to (3) of the Rules is reproduced as under: "(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 i....

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....utput services excluding exempted services, and shall take CENVAT credit only on inputs under subclause (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 manufacture of goods or the provider of output service, opting not to maintain separate accounts, shall follow any of the following options, as applicable to him, namely:- (i) pay an amount equal to six 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 ....

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....relation to the manufacture of exemplted goods or for provision of exempted services and on input services used exclusively in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services. Explanation III.-- No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services." Rule 6(1) states that no cenvat credit shall be allowed on the inputs used in relation to manufacture of exempted goods. Sub-rule (2) provides exception to sub-rule (1), it deals where the manufacturer or a provider of output service is involved in both dutiable as well as exempted goods or services. For availing the CENVAT credit,....