TaxTMI 
TaxTMI 
2021 (10) TMI 1285
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....ed 0103.2002 as amended and Notification No. 4/2006-CE dated 01.03.2006 as amended. It was further noticed that the appellant availing cenvat credit for common inputs viz. Labour Contractor services, auditing and accounting services, insurance , promotion of product sales etc for which no separate accounts was maintained. Therefore, the department case is that the appellant is required to pay 10%/5% of the value of exempted goods in term of Rule 6 (3) (i) of Cenvat Credit Rules, 2004 prevailing at relevant time. Accordingly Show cause notice dated 02.02.2011 was issued wherein demand of an amount equal to 10%/5% exempted goods cleared by the appellant for the period January 2006- September 2010 was raised along with proposal for penalty under Rule 15 read with Section 11AC and interest under section 11AB of Central Excise, 1954. The Adjudicating Authority vide order-in- original dated 12.12.2014 confirmed the demand and imposed penalty and interest. Being aggrieved by the said OIO appellant filed the present appeal. 2. Shri Jigar Shah, learned Counsel appearing on behalf of the appellant submits that on pointing by the audit officers the appellant have admittedly reversed the prop....
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....cts - 2008 - TIOL- 596- HC- AHM- CX CCE vs. Ashima Dyecot 2008 (232) ELT 580 (Guj.) affirmed by Hon'ble Supreme Court - 2009 (240) ELT A41 (SC) CCE Bangalore vs. Himalaya Drug Co.- 2011- TIOL- 246- HC-KAR-CX CCE vs. Maan Pharmaceuticals - 2011 (263) ELT 661 (Guj.) CCE vs. Kudremukh Iron & Steel - 2011 (271) ELT 172 ( Kar) 2.3 He further submits that as regard the judgment of M/s Nicholas Piramal Ltd- 2009 (244) ELT 321 (Bom) relied upon by the Authorized Representative, he submits that purpose and intention of retrospective amendment to Rule 6 of the Cenvat Credit Rules, 2004 in year 2010 was just to overcome the effects of the decision of M /s Nicholas Piramal Ltd (supra). Even if the lawmakers realized that if the said decision is given effect to then the genuine assesses like the appellant would be in great hardship. Therefore, it was proposed to amend the Cenvat Credit Rules, 2004 with retrospective effect. 2.4 He Submits that after the retrospective amendement of Cenvat Credit Rules, 2004 the decision of M/s Nicholas Piramal Ltd (supra) has lost its significance and cannot be relied upon. 2.5 He further submits that for raising majority dem....
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....t credit attributed to the exempted final product. The department cannot impose a particular option on the appellant. As regard the delay in reversal of credit the appellant has paid the interest therefore, the option of reversal of proportionate credit as provided under Rule 6(3) (ii) of Cenvat Credit Rules, 2004 stands complied with. This issue is no longer res- integra as the identical issue has been considered in various judgments. Some of the judgments with relevant order are reproduced below:- Mercedes Benz India (P) Ltd - 2015 (40) STR 381 (Tri.Mum) 5. We have considered the submissions made by both sides. From the facts and circumstances of the case and arguments put forth by rivals, we find that the issue to be decided by us is whether appellant is required 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 reprod....
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....vices excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (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 manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow [any one] of the following options, as applicable to him, namely :- (i) pay an amount equal to five percent 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 (a) of sub-rule (2), take CENVAT credit only 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) : Prov....
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....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 under sub-rule (3A) of Rule 6. As regard the compliance of the procedure and cond....
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....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 chosen, choice, the act of choosing". From the said meaning of the term "optio....
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....put or input services used in dutiable and exempted goods, the provision involved in the present case i.e. Rule 6(3) (i) (ii) (3A) has not been considered in the relied upon judgments, therefore the same are not applicable. As regard the other judgments, all these judgments having different facts and dealing with other provisions such as SSI exemption, exemption notification, etc., which are not identical to the fact of the present case, Moreover, in the present case the substantive provisions under Rule 6(3)(ii) and sub rule (3A) i.e. payment of equivalent to the Cenvat credit, which the appellant have complied with and if at all there is delay, the required interest has also been paid, therefore in the present case, there is no case 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. Himmat Glazed Tiles- 2018 (15) GSTL 486 (Guj.) These appeals arise out of common facts. We may record fa....
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....0 of 2004. He has further observed that the circular does not speak of final goods or inputs, but, it refers to the goods only and then, he came to the conclusion that as the subjected two notifications refer to the aspect of credit being taken or otherwise of inputs, maintenance of separate accounts for inputs is of prime importance. Since this condition was not satisfied, he confirmed the levy of duty, penalty, etc. This finding of the learned Commissioner of Central Excise is not in consonance with the observations made and the ratio laid down by the Honourable Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra). 6. The findings rendered by the Honourable Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra) are clearly applicable to the present matters. In that case also, the case of the Department was that reversal of credit entries is not permitted by the rules. The assessee is not entitled to remove the copper wires without payment of duty since credit of the duty paid on the inputs used in the manufacture of copper wire had already been taken in accordance with Rule 57A. Once appropriate entries have been made in the register, there is no....
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....e had come up for consideration before the Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India, reported in 2004 (174) E.L.T. 422 (All.), wherein it is held that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence, the benefit has to be given of the notification granting exemption/rate of duty on the final products since the reversal of credit on the input was done at the Tribunal‟s stage. While arriving at this conclusion, the Allahabad High Court has referred to various judgments under which such reversal was made subsequently and still the benefit was given to the assessee. 8. Since the Tribunal has correctly applied the law laid down by the Honourable Supreme Court and the issue is well settled, we are of the view that no question of law, much less any substantial question of law, arises out of the order of the Tribunal and hence, all the three appeals are, accordingly, dismissed. Welspun Corp. Ltd - 2019 (368) ELT 179 (Tri. Ahmd) 6. We have carefully considered the submissions made by both the sides and perused the records. The limited issue to be decided by us is that in a case where at the time of r....
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....xempted goods or pay an amount determined under sub-rule (3A) i.e. proportionate credit attributed to the exempted goods. The appellant rightly availed the option of sub-rule (3A) of Rule 6 of CCR, 2004, the only lapse on the part of the appellant is that the payment of Cenvat credit was made belatedly, however the appellant have paid interest for the period right from availing the Cenvat credit till the payment/reversal of proportionate Cenvat credit which create a position as if the appellant have not availed Cenvat credit right from the date when Cenvat credit was availed. Therefore there is no reason for imposing option under Clause (i) of Rule 6(3) i.e. payment of 5%/10% of the value of exempted goods. This issue has been considered by this Tribunal time and again, though the appellant have relied upon almost 20 judgments on this issue which are directly applicable. However, we are referring some of the judgments as under : * The Hon‟ble Tribunal in the case of Jay Balaji Industries Ltd. - 2017 (352) E.L.T. 86 (T) held in para 5 that : "5. The Hon‟ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. v. CCE, Nagpur - 1996 (81) E.L.T. 3 (S.C.) which ....
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.... along with interest subsequent to removal of exempted final products, then the appellant cannot be said to have taken credit of inputs used in or in relation to the manufacture of exempted final products, and they need not pay an amount @ 8% or 10% of the sale price of exempted final products. The adjudicating authority has worked out the demand of Rs. 88,41,543/- on the basis of 8% or 10% of the sale price of exempted final products cleared by the appellant during the material period, while the respondent claims that the input credit attributable to manufacture of exempted final products is only Rs. 7,85,573/-, which they have reversed. In the present case we observed from the case records that the appellant has furnished relevant data/documents available at pages 372 to 396 of the appeal papers filed in Appeal No. E/449/2011 showing Cenvat credit reversed/required to be reversed on inputs used in the manufacture of exempted final products during the material period. The appellant has also placed on record copies of 21 invoices at pages 349 to 370 of the appeal papers of Appeal No. E/449/2011 showing receipt of exempted input (Alpha Beta Arteether) of value of about three crore r....
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....e in writing the department regarding the option exercised. In the present case, admittedly there is no intimation given by the appellant informing his exercise of option. The contention 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 calculated under the first option. I am afraid I cannot endorse this contention. The said rule does not say that on failure to intimate, the manufacturer/service provider would lose his choice to avail second option of reversing the proportionate credit. Rule 6(3A), as seen expressly stated is nothing but a procedure contemplated for application of Rule 6(3). Therefore, the argument of the Revenue that the requirement to intimate the department about the option exercised, is mandatory and that on failure, the appellant has no other option but to accept and comply Rule 6(3)(i) and make payment of 5%/10% of sale price of exempted goods/value of exempted services is not acceptable or convincing. The Rule does not lay down any such restriction. The procedure and conditions laid in Rule 6(3A) is intended to make Rule 6(3) workable and not to take away the option availab....
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....d order is not sustainable on merit as well as on limitation and therefore, I set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any." 7. In view of the above, the issue is no longer res integra, therefore, the demand confirmed equal to 5%/10% of value of the exempted goods is not sustainable. As regard the submission of Ld. Counsel regarding the limitation, we find that firstly, the appellant had not utilized the Cenvat credit attributed to the exempted goods, secondly the fact regarding the availment of credit and manufacture and clearance of exempted and non-excisable goods are very much on record, therefore, the suppression of fact cannot be attributed on the part of the appellant. We also find that since the issue regarding reversal of Cenvat credit under Rule 6(3) is contentious and various cases on the same issue have been made out which can be seen from such of judgment given above, therefore, on the issue related to Rule 6(3) particularly in the facts of the present case it cannot be said that the appellant had mala fide intention to evade payment of duty. Therefore, demand for the extended period is also hit by limitation ....
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....ts of the receipt and use the inputs for the aforesaid purpose and does not take credit of the specified duty on such inputs. 9. In the present case, since it was not possible to maintain separate accounts in respect of the common input viz., ink in terms of sub-rule (2) of Rule 57CC the petitioners had initially taken credit of the specified duty on such inputs. However, whenever they utilised ink in the manufacture of printed labels, they debited the proportionate amount of Modvat credit taken thereon to comply with the provisions of Rule 57C of the Rules. 10. Subsequently vide Section 69 of the Finance Act the Central Excise Rules, 1944 have been amended by inserting Rule 57CCC. It may be germane to refer to the provisions of Section 69 of the Finance Act, 2010 which reads thus : "69. Amendment of Central Excise Rules, 1944 by insertion of new rule 57CCC. - (1) The Central Excise Rules, 1944, made by the Central Government in exercise of the powers conferred by section 37 of the Central Excise Act, shall stand amended and shall be deemed to have been amended retrospectively, in the manner specified in column (3) of the Fourth Schedule, on and from and up to the correspondi....
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....be punishable as an offence which would not have been so punishable had this section not come into force." 11. The newly inserted Rule 57CCC of the Central Excise Rules, 1944 reads thus : THE FOURTH SCHEDULE [See section 69(1)] Sl. No. Provisions of Central Excise Rules, 1944 to be amended Amendment Period of effect of amendment (1) (2) (3) (4) 1. Insertion of new rule 57CCC. In the Central Excise Rules, 1944, after rule 57CC, the following rule shall be inserted, namely : - "57CCC. Reversal of Actual Credit.- Where a dispute relating to adjustment of credit on inputs used in or in relation to exempted final products relating to the period beginning on the 1st day of September, 1996 and ending with the 28th day of February, 1997 (both days inclusive) is pending on the date on which the Finance Bill, 2010 receives the assent of the President, then, notwithstanding anything contained in sub-rules (1) and (2) of rule 57C and subrules (1) and (2) of rule 57CC, a manufacturer availing credit of specified duty in respect of any inputs, other than inputs used as fuel, and manufacturing final products which are chargeable to duty and also other final products which are no....
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....make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountant or a Cost Accountant certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of final products which are exempted from the whole of the duty of excise leviable thereon or chargeable to Nil rate of duty, within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President. The Finance Bill, 2010 has received the assent of the President on May 2010. 13. Sub-section (4) of Section 69 of the Finance Act, 2010 provides that notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been taken or done, at any time during the period commencing on and from 1st day of September 1966 and ending with the 31st day of March 2000, relating to the provisions as amended by sub-section (1), shall be deemed to be and deemed always to have been, for all purposes, as validly and effectively taken or done as if the amendment made by sub-section (1) has been in force at....
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....d provisions take care of a situation like the present one. 16. In view of the above discussion, keeping in view the amended provisions of the Central Excise Rules, 1944 as amended by Section 69 of the Finance Act, 2010, the petition is required to be allowed in the following terms : (i) The impugned order dated 30th March 2000 passed by the respondent No. 3, Assistant Commissioner, Central Excise, Ahmedabad is hereby quashed and set aside. (ii) The matter is restored to the file of the Adjudicating Authority who, after giving due opportunity of hearing to the petitioners, shall re-determine the credit taken on the common input, viz., ink, insofar as the same relates to the demand raised by the two show causes notices referred to in the impugned order. (iii) The petitioners shall produce the necessary evidence in the form of certificate from a Chartered Accountant or a Cost Accountant for the relevant period certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of final product which are exempt from the whole duty or chargeable to Nil rate of duty along with other documentary evidence for the relevant period. (iv) If an....