AI Drafter 
TaxTMI 
TaxTMI 
2020 (12) TMI 1124
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....y the appellant during the investigation against the confirmed demand. The demand relates to the period 16.07.2012 to 31.03.2016. 2. The facts of the case in brief are: (i) The appellant, an integrated steel plant engaged in manufacture of sponge iron and pig iron, which is further used in its factory at Shyamraipur, Kharagpur, West Bengal for manufacturing MS Billets, MS Wire, Sinter, Ductile Iron Pipes ("DI Pipes"), etc. removes some quantity of the DI Pipes without payment of duty in terms of Notification No. 12/2012-CE dated 17.03.2012, which exempts pipes and pipe fittings needed for delivery of water for human/animal consumption. However, until the time the appellant‟s liability in that regard was pointed out to it by the jurisdictional Range Superintendent, the appellant, until early 2012, was neither maintaining separate account of common input/input services used for manufacture of dutiable as well as exempted goods nor was it making payment of the amount equal to 5% or 6%, as the case may be, in terms of Rule 6(3) of the Cenvat Rules, 2004 (hereinafter referred to as the "Cenvat Credit Rules"). Upon being so pointed out by a letter date....
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....s also not possible on the part of the appellant to segregate bills of input services, the method as adopted by the appellant of apportionment after manufacture of the final product was not in compliance with Rule 6(2) of the Cenvat Credit Rules. The appellant had also not applied the apportionment method for all invoices of common input services and therefore also the provision of Rule 6(2) of Cenvat Credit Rules was violated. Hence the provisions of Rule 6(3)(i) was applicable and the appellant was required to pay an amount equal to 6% of the value of the exempted goods; (iv) On the appellant filing its reply dated 07.11.2017 and personal hearings in the matter during which the appellant submitted further written submissions dated 20.11.2017, 16.01.2018 and 23.04.2018, the impugned order was passed by the Commissioner, holding amongst other that the method of back calculation and approximation, as adopted by the appellant to compute the quantity of inputs used in the manufacture of exempted final products, was "beyond the provision prescribed in the said sub-rules meant for specific purposes" (paragraph12.29 of the said order) and that "the best method that can be ....
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....e quantum of the reversals have also been made good by way of further reversal with interest. Consequently, the demand confirmed in the impugned order under Rule 6(3)(i) of the Cenvat Credit Rules is not sustainable for the reason that the appellant has not availed the cenvat credit of duty/tax paid on inputs and input services used for manufacture of exempted DI Pipes, inasmuch as reversal of duty/tax paid on inputs and input services attributable to the manufacture of DI Pipes, tantamount to having not taken such credit at all. Further, it is settled law that in case of common inputs and input services used in or in relation to the manufacture of dutiable and exempted final products, proportionate to use of input and input services in exempted products, if reversed, the assessee is not required to make payment in terms of Rule 6(3)(i) of the Cenvat Credit Rules. In support, the appellant relied upon the following decisions: (i) Commissioner of Central GST and CX Vs. Himmat Glazed Tiles, 2018 (15) GSTL 486 (Guj) (ii) Commissioner of C.Ex. Vs. Maan Pharmaceuticals Ltd., 2011 (263) ELT 661 (Guj) (iii) Rukmani Power and Steel L....
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....input services used in or in relation to the manufacture of exempted products. Further, not only that maintenance of separate accounts and reversal of taxes/duties attributable to inputs/input services used in manufacture of exempted DI Pipes were reflected in the appellant‟s ER-1 returns since July 2012, but also the same was confirmed during the EA-2000/CERA audits during 2012-13 to 2014-15. Thus the Department was fully aware of all relevant facts, including the manner of compliance of Cenvat Credit Rules by the appellant. Therefore, none of the ingredients of Rule 15(2) of the Cenvat Credit rules/Section 11AC of the Act are satisfied to invoke the extended period of limitation. In support of this contention the appellant relied upon the following decisions: (i) Commissioner of C.Ex. Vs. Pragathi Concrete Products (P) Ltd., 2015 (322) ELT 819 (SC) (ii) Continental Foundation Jt. Venture Vs. Commr. of C.Ex., 2007 (216) ELT 177 (SC) (iii) Uniworth Textiles Ltd. Vs. CCE, 2013 (288) ELT 161 (SC) (iv) Pushpam Pharmaceuticals Company Vs. CCE, 1995 (78) ELT 401 (SC) (v) Cranes and Structural Engineers Vs. ....
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....e of separate accounts of "inputs used"/receipt and "use" of input services. In other words, as per Rule 6(2), w.e.f. 01.03.2011, provides that separate account can be maintained even after the common inputs/input services are "used‟ for manufacture of dutiable goods/services and exempted goods/services. Such separate account of common inputs / input services can only be done by back calculation method, which has been undisputedly adopted by the appellant in the instant case. 8.2 From both the show cause notice and the impugned order we find that it is an undisputed fact that it is not possible to differentiate the DI Pipes between those exempted and dutiable at the point of or prior to its production and thus it is not possible to keep a separate account of the inputs/input services meant for use or intended for use for manufacture of exempted D.I Pipes inasmuch as the exemption from duty is determined at the time of clearance of the D.I Pipes under Notification No. 12/2012-CE dated 17.03.2012. In the show cause notice this fact is acknowledged as follows: "it was simply impossible to maintain separate account for inputs where there is only one blast furnace wher....
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....the Hon‟ble Gujarat High Court, dismissing the appeals filed by the Revenue, observed and held as follows: "2. Briefly stated the facts are that the assessee is a manufacturer of ceramic products. These are by-products and is called body clay powder which envisages nil rate of duty. The assessee did not maintain separate accounts and initially availed cenvat credit on the exempt product also. However, subsequently, it appears that such credit so availed was reversed with interest. The department however still objected to such procedure. 3. The appellate authority and the Tribunal held that since the assessee had reversed the cenvat credit with interest, no further adverse consequence should follow. We notice that this Court in case of Commissioner Vs. Ashima Dyecot Ltd. reported in 2008 (232) ELT 580 has observed that reversal of credit amounts to non-availment. 4. We do not find any error in the view of the Tribunal. Tax appeals are dismissed." 8.4.2 The Hon‟ble Bombay High Court also in the case of Commissioner of Central Excise Vs. IVP Ltd., 2017 (349) ELT 18 (Bom) upheld reversal of proportionate credit as compliance with re....
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....nufacture of exempted as also dutiable final product. They were availing cenvat credit on duty paid on inputs, being used by them in both types of products and were maintaining a common cenvatable account. 3. Revenue by entertaining a view that inasmuch as the appellants are using the common inputs in the manufacture of exempted final product, they are required to pay 10% of the value of final exempted product, in terms of provisions of Rule 6(3)(b) of the Cenvat Credit Rules, initiated proceedings against them for recovery of amount of Rs. 26,29,898/-. The same was confirmed by the original adjudicating authority. 4. However, on appeal Commissioner (Appeals) took note of the fact that the assessee has already reversed the cenvat credit attributable to inputs and input service used in the manufacture of exempted final product and as such, applicability of Rule 6(3)(b) is ruled out. Accordingly, he set aside the impugned order of the lower authorities and allowed the appeal. 5. Hence, the present appeal by the Revenue. 6. We find that Revenue is not disputing the fact of reversal of proportionate credit. However, the only g....
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....dit was utilised but, thereafter, refunded, it would amount to not utilising the said MODVAT credit. Same view has been taken by the High Court of Allahabad in Hello Minerals Water (P) Ltd. Vs. Union of India [2004 (174) ELT 422 (All)]. 4. On a specific query put by the Court, we were informed that as far as the aforesaid two judgments are concerned, they were accepted by the Department and no appeal was filed there against. In the impugned judgment the Tribunal has decided the issue in favour of the assessee relying upon the aforesaid two decisions. 5. We, thus, do not find any reason to interfere with this order. The appeal is dismissed accordingly." This principle would also apply to the instant case. 8.4.6 The facts of the present case being similar to the abovementioned decisions, the principle laid down therein is squarely applicable. Respectfully following the same we therefore hold that the demand of Rs. 58,96,13,230/- confirmed by the impugned order is unsustainable since the appellant has reversed the cenvat credit on input and input services attributable to the exempted product, including in some ca....
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....spect reference may also be made to the Larger Bench decision of the Tribunal in Ankit Packaging Ltd. Vs. CCE (supra). This case involved the issue as to whether an assessee who paid duty at the normal rate at the commencement of the financial year under the provisions of Notification 1/93 and thereafter was eligible to avail the benefit of the said notification during the same financial year if he satisfies other conditions. In paragraph 5 of the order it was observed, inter alia, as follows: "............................................................................................. The only question is whether payment of duty on some goods cleared in the beginning of the financial year could be considered as de facto opting out of the benefit of the exemption notification. We find no warrant for such a view. The notification calls for specific opting out by a manufacturer. There was no requirement to opt in. In the present case, the assessee has also written to the department informing that it was wanting to avail the exemption notification. In the face of such opting in, there was no justification for interpreting the payment of duty on some goods as o....
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....ugned order. In the impugned order it has been acknowledged by the Commissioner also that Explanation I to Rule 6(3) of the Cenvat Credit Rules does not bar exercising option in the middle of a financial year. However, according to him such option has to be exercised by physically writing to the Range Officer with assessee particulars and Cenvat Account Balance, which has not been done in the instant case. This contention has been considered and rejected by a Coordinate Bench of the Tribunal in the case of Cranes & Structural Engineers Vs. Commr. of C. Ex. (supra). It has been observed and held therein as follows: "4.1 On analysis of Rule 6(3A), I find that while exercising the option, the manufacturer of goods or the provider of output service shall intimate in writing to the Department regarding the option exercised. In the present case, admittedly there is no intimation given by the appellant informing the exercise of his option. The argument of the Department is that when the appellant has not intimated his option in writing then the appellant is bound to pay the duty amount calculating under the first option. According to me, this argument is devoid of merit, be....