TaxTMI 
TaxTMI 
2021 (11) TMI 15
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....appellant submits that even for the period which is not covered under the retrospective amendment brought under Finance Act, 2010, if the assessee reversed the proportionate Cenvat Credit in respect of input/input service attributed to exempted goods even though belatedly but with interest, the demand of 5%/10% of the value of exempted goods is not sustainable as held in the following judgments:- • 2009 (244) ELT 321 (Bom) - CCE, Thane-I Vs. Nicholas Piramal (I) Ltd • 2009 (240) ELT 661 (SC) -CCE Vs. Gujarat Narmada Fertilizers Co Ltd • 2018 (17) GSTL 422 (Del) - Lally Automobiles P Ltd Vs. Commissioner (Adjudication) • 2018 (17) GSTL 181 (Gu) - CCE, Vadodara-Il Vs. Unimed Technologies Ltd • 2018 (16) GSTL 257 (Raj) - Modern Insulators Ltd Vs. Additional CCE, Jodhpur • 2014 (33) STR 440 (Tri-Kol) - Tata Steel Ltd Vs. CCE, JSR • 2004 (178) ELT 55 (SC) - State of Jharkhand Vs. Ambay Cements • 2017 (5) GSTL 225 (Mad) - Ruchika Global Interlinks Vs. CESTAT, Chennal • High Court of Gujarat in Appeal No. R/Tax No. 571/2019 - CGST Vs. Bombay Minerals Ltd • 2008....
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....in a case where at the time of receipt of input services, the appellant availed Cenvat credit on the entire service and on pointing out by the audit party they reversed the Cenvat credit in respect of input services attributed to the exempted goods/non-excisable goods along with interest, whether the demand confirmed by the Revenue under Rule 6(3) i.e. 5%/10% on value of exempted goods is legal and proper. The appellant is not disputing that the Cenvat credit in respect of input services attributed to exempted goods namely Steam, Fly-Ash and non-excisable goods i.e. electricity sold outside their factory, is not admissible and they have admittedly reversed the proportionate Cenvat credit and also paid the interest from the date of taking credit till the date of reversal. For ease of reference, we reproduce below the Rule 6(3) of Cenvat Credit Rules, 2004 : (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 either of the following options, as applicable to him, namely :- (i) the manufacturer of goods shall pay an amount equal to five per....
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....andrapur Magnet Wires (P) Ltd. v. CCE, Nagpur - 1996 (81) E.L.T. 3 (S.C.) which has been followed in many other decisions of the High Court as well as the Tribunal has held that once Cenvat credit is reversed, it is to be considered ab initio not availed. In the light of this judgment of the Hon'ble Supreme Court, the reversal of Cenvat credit already made by the appellant is to be considered as not taken ab initio. The Government has introduced the facility of proportionate reversal w.e.f. 1-4-2008 to mitigate the difficulties faced by manufacturers to maintain separate accounts for inputs/input services as well as when the same are commonly used for dutiable as well as exempted products/services. Though detailed procedure starting with an option to be exercised by manufacturer has been prescribed, in the present case, the appellant has not followed the same. However, it is on record that they have already reversed an amount claimed to be proportionate. It is also pertinent to record that this has been done by the appellant even before the issue of the show cause notice in this case. We are of the considered view that the failure of the appellant to follow the procedure p....
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....howing receipt of exempted input (Alpha Beta Arteether) of value of about three crore rupees during the material period, for which no Cenvat credit could be taken. In view of these facts on record, we find that the method adopted by the adjudicating authority for working out of the demand of Rs. 88,41,543/-, on the basis of 8% or 10% of the sale price of dutiable and exempted final products, is not maintainable. We, therefore, remand the matter to the adjudicating authority for proper verification of appellant's claim of reversal of Cenvat credit on inputs attributable to manufacture of exempted final products on the basis of appellant's records after affording opportunity to the appellant to explain their case before deciding the issue of quantum of Cenvat credit in remand proceedings." • The Hon'ble Supreme Court in the case of Bombay Dyeing & Mfg. Co. Ltd. - 2007 (215) E.L.T. 3 held in para 8 that : "8. There is no merit in this civil appeal. Under the notification, mode of payment has not been prescribed. Further, exemption is given to the final product, namely, grey fabric under the Central Excise Act, 1944, levy is on manufacture but payment is at the ti....
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....itions laid in Rule 6(3A) is intended to make Rule 6(3) workable and not to take away the option available to the assessee. In any case, at no stretch of imagination can it be said that on failure to intimate the department, Rule 6(3)(i) would automatically come into application." • The Hon'ble Tribunal in the case of Cranes & Structural Engineers - 2017 (347) E.L.T. 112 (T) held in para 4.1 that : "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, because the said Rule does not say anywhere that on failure to intimate, the manufacturer/service provider would lose his right to avail second option of reversing the proportionate credit. Sub-rule (3A) of Rule 6 i....
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....lant had mala fide intention to evade payment of duty. Therefore, demand for the extended period is also hit by limitation for the same reason the penalties imposed are also unsustainable. 8. As per our above discussion, we hold that proportionate credit paid by the appellant along with interest is sufficient compliance under Rule 6(3), accordingly the same is maintained. The demand under Rule 6(3)(i) i.e. 5%/10% of value of the exempted goods and all the penalties are set aside. The appeal is allowed in the above terms. • CESTAT Ahmedabad Final Order No. A/12299/2021 dated 04/08/2021 in case of M/s. P&B Pharmaceuticals Limited. 4. We have carefully considered the submissions made by both the sides and perused the record. We find that there is no dispute about reversal of credit on input services attributed to exempted goods. It is also observed that appellant have paid Cenvat credit and wherever there is delay in such payment, the appellant paid interest. In this position, it should be considered as if the appellant have not availed Cenvat credit. Accordingly, Rule 6(3) of Cenvat Credit Rules, 2004 shall not be invoked. We find that in the appellant'....
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....t payment of duty. We are not going to the merits of the decision of the Commissioner in so far as the same relates to dropping of the demand in the four show cause notices as the Department is not in appeal before us. We are inclined to accept the offer of the appellant-company to reverse the entire credit attributable to the exempted product covered in the nine show cause notices and accordingly we set aside the order of the Commissioner confirming the demand in respect of the nine show cause notices with the direction to consider and accept their offer to reverse the entire credit on the common inputs i.e. caustic soda lye and hydrochloric acid. The department shall re-determine the credit taken on the common inputs i.e., caustic soda lye and hydrochloric acid in so far as they relate to demand proposed in the 9 show cause notices. The assessee shall produce the necessary evidence in the form of chartered accountant's certificate for the relevant period. If any further credit is to be reversed, the same shall be reversed within four weeks from the date of receipt of the communication from the department." 5. The appellant has produced relevant extracts from the relevant....
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....stances, in absence of any question of law, as proposed or otherwise, much less a substantial question of law, the appeal is dismissed. • CCE Vs. Mann Pharmaceuticals Ltd.-2011 (263) ELT 661 (Guj.) 7. As can be seen from the impugned order of the Tribunal, the Tribunal has merely followed the decision of the Supreme Court in the case of M/s. Chandrapur Magnet Wires Ltd. (supra), as well as a decision of the jurisdictional High Court in the case of M/s. Maize Products (supra). In the case of Commissioner of Central Excise v. Maize Products, this Court has held as follows :- "5. The appellant has produced relevant extracts from the relevant Rule of Cenvat Credit Rules, 2002 which relates to obligation of manufacturer of dutiable and exempted products. Under sub-rule (2) of the said Rules, a manufacturer is required to maintain separate accounts regarding inputs used for manufacturing of dutiable products and inputs used for manufacturing of exempted products. However, sub-rule (3) stipulates that, in a case where the manufacturer opts not to maintain separate accounts, the manufacturer shall follow either condition (a) or condition (b), as the case may ....