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2019 (8) TMI 1874
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....ad with Section 11A(2) of Cenvat Excise Act, 1944. b) I appropriate the amount of Rs 1,22,98,068/- (Rupees One Crore Twenty Two Lakhs Ninety Eight Thousand Sixty Eight only) paid by the assessee against the above mentioned confirmed amount of Rs 32,39,35,223/-. c) I order recovery of interest under Rule 14 of the CENVAT Credit Rules, 204 read with Section 11AB of the Central Excise Act, 1944. d) I appropriate the amount of Rs 17,49,730/- (Rupees Seventeen Lakhs Forty Nine Thousand Seven Hundred and Thirty only) paid by the assessee against the interest payable on Rs 32,39,35,223/- under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 and order recovery of remain interest payable. e) I impose a penalty of Rs 32,39,35,223/- (Rupees Thirty Two Crores Thirty Nine Lakhs Thirty Five Thousand Two Hundred and Twenty Three only) under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 " 2.1 Appellants are engaged in manufacture of Heat Exchangers, Pressure Vessels and Boilers etc classifiable under Chapter 84 of First Schedule to Central Excise Tariff Act, 1985. Th....
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....r to 01.04.2008 and Rule 6(3)(i) of CCR, 2004 w.e.f 01.04.2008. c) appropriate interest in terms of Section 11AB of the Central Excise Act, 1944 should not be demanded and recovered on the abovementioned amount of Rs 32,39,35,223/- (Rupees Thirty Two Crores Thirty Nine Lakhs Thirty Five Thousand Two Hundred and Twenty Three only), and d) the amount of Rs 17,49,730/- (Rupees Seventeen Lakhs Forty Nine Thousand Seven Hundred and Thirty only) should not appropriate against the interest payable under (iii). e) penalty of should not be imposed upon them under Section 11AC of Central Excise Act, 1944 read with Rule 15 of the CENVAT Credit Rules, 2004 for contravention of Rule 6(3)(b) of CCR, 2004 prior to 01.04.2008 and Rule 6(3)(i) of CCR, 2004 w.e.f 01.04.2008." 2.3 Show Cause Notice was adjudicated by the Commissioner as per the impugned order referred in para 1, supra. 2.4 Aggrieved appellants are in appeal before Tribunal. 3.1 We have heard Shri V Sridharan, Senior Advocate with Shri Prakash Shah and Shri Prasad Paranjape, Advocates, for the Appellants and Shri Ajay Kumar, Additional Commissioner, Authorized Representative for the revenue. 3.2 ....
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....orized Representative while reiterating the findings in impugned order submitted that- • Rule 6 provides for a scheme and also machinery provision to be followed by the manufacturer of dutiable and exempted goods; • In case where the manufacturers does not maintain separate account of input/ input services used for manufacture of exempted goods as per Rule 6(2), he has been provided with two options, either to pay a specified % of the value of exempted clearance (Rule 6(3)(i)) or make proportionate reversal (Rule 6(3)(ii)). • Since appellant had not maintained separate accounts as provide by Rule 6(2), they were required to either make proportionate reversal every month by following the procedure as laid down Rule 6(3A). Appellant having not made provisional reversal every month as required under Rule 6(3A), they were required to pay amount determined at specified % of the exempted clearance as per 6(3)(ii). • The contention of the appellants, in respect of applicability of Amendments made by Section 73 of Finance Act, 2010 are misplaced. These amendments were only applicable in respect of the disputes which were pending as on the....
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....ces the said rule should be used as a measure to extract illegal amounts from the assessee. The scope of Rule 6, is limited to the extent that assessee do not get the undue benefit by availing the CENVAT Credits in respect of the exempted goods manufactured by him or the exempted services provided by him. We find that issues which are in dispute have been considered by the tribunal in case of Mercedes Benz vs Commissioner of Central Excise Pune -II [2015- TIOL-1550-CESTAT-MUM] and following was held "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) along with 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 reproduced below: RULE 6. Obligation of a manufacturer....
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.... (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub­clauses (ii) and (iv) of clause (a) and input services under sub­clauses (ii) and (iv) of clause (b). (3) Notwithstanding anything contained in sub­rules (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 per cent of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub­rule (3A); or (iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in clause (a) of sub­rule (2), take CENVAT credit only on inputs under subclauses (ii) and (iv) of said clause (a) and pay an amount as determined under sub­rule (3A) in respect of input services. The provisions of sub­clauses (i) and (ii) of clause (b) and subclauses (i) and (ii) of clause (c) of sub­rule (3A) sha....
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....d intimated the same to the jurisdictional superintendent in writing vide letter dated 14/3/2012. From the perusal of the said letter, we observed that the appellant categorically stated in the said letter that payment of CENVAT Credit which they have made along with 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, 2012, in accordance to which, the appellant are supposed to an amount equivalent to CENVAT Credit on input services attributed to the exempted service in terms of Rule 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....
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....and produced. Though these particulars have not been submitted specifically under a particular letter, but since these particulars otherwise by way of return and some of the information under their letters has admittedly 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 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 ad....
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....n by which CENVAT credit, which is other than the credit attributed to input services used in exempted goods or services; can be recovered from the assessee. 5.6 We have gone through judgments relied upon by the Ld. A.R. In the arguments, we found that as regards the judgments on the issue of availment of CENVAT credit on the input 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 judgements, 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 provision sunder 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 non compliance of procedure and condition. Therefore the judgments cited by the Ld. A.R. are not applicable.....
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....L-2385-CESTAT-DEL the Tribunal held that assessee is entitled for reversal of credit. The Tribunal held as under : "6. The proceedings against the respondent is to recover an amount equivalent to 6% of the value of the exempted service. The Original Authority held that the respondent is liable to follow one of the two options in terms of Rule 6(3) of CCR, 2004. The respondent followed second option and reversed the proportionate credit attributable to the exempted service, along with interest for delayed reversal of such credit. We find that the only objection of the Revenue is to the effect that the respondent failed to exercise the option for reversal at the time of availing credit. We note that the annuity products are considered as exempted service as held by the impugned order. It is also held that the appellant has to follow the consequences of such finding. We note that upon the direction of the impugned order, the respondent did exercise the second option and reversed the credit along with interest. In such factual background, we find that there is no reason to insist that the respondent should necessarily follow the first option of paying 6% of the value of exempt....
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....Modvat Rules and Rule 6 of Cenvat Rules, respectively was not correct. The High Court was required to apply literal rule of interpretation when the language of these rules is clear and unambiguous. 20. Let us now examine the position contained in Rule 57CC on the touchstone of the aforesaid position. No doubt, Rule 57CC requires an assessee to maintain separate records for inputs which are used in the manufacture of two or more final products one of which is dutiable and the other is non-dutiable. In that event, Rule 57CC will apply. For example, a tyre manufacturer manufactures different kinds of tyres, one or more of which were exempt like tyre used in animal carts and cycle tyre, where car tyres and truck tyres attract excise duty. The rubber, the accelerators, the retarders, the fillers, sulphur, vulcanising agents which are used in production of tyres are indeed common to both dutiable and exempt tyres. Such assessees are mandated to maintain separate records to avoid the duty demand of 8% on exempted tyres. ....." 4.8 However in order to mitigate the difficulties faced by the trade by strict application of the said rule, Rule 6 was amended retrospectively by Finan....
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...., the Central Government shall have and shall be deemed to have the power to make rules with retrospective effect as if the Central Government had the power to make rules under section 37 of the Central Excise Act, retrospectively, at all material times. Explanation.-For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable had this section not come into force." THE EIGHTH SCHEDULE [See section 73(1)] S No Provisions of CENVAT Credit Rules, 2004 to be amended Amendment Period of effect of amendment 1 2 3 4 Rule 6 of the CENVAT Credit Rules, 2004 as published vide notification number G.S.R. 600(E), dated the 10th September, 2004 [23/2004- CENTRAL EXCISE (N.T.) dated the 10th September 2004]. In the CENVAT Credit Rules, 2004, in rule 6, after sub-rule (6), the following sub-rule shall be inserted, namely:- '(7) 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 10th day of September, 2004 and ending ....
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....re contained in the budget proposals are as under: o ... o Benefit of allowing Cenvat credit to be reversed on proportionate basis (when common inputs are used for the manufacture of dutiable and exempt products) is being extended retrospectively for pending cases. Suitable provisions have been incorporated in the Finance Bill, 2010 (clauses 68 to 72). o ......" 4.8 Thus the benefit o proportionate reversal has been extended from retrospective effect, in cases where common inputs/ input services were used for manufacture of dutiable and exempt products. In our view the intention behind the amendment made, is quite obvious. The assessees have been allowed to proportionately reverse the credit attributable to inputs/ input services used for manufacture of exempted goods, in cases where common inputs/ input services are used or manufacture of both dutiable and exempted goods. We are no in agreement with the submissions made by the learned Authorized Representative, when he states that this amendment is applicable only in case where the show cause notice was issued and was pending on the date of assent by the President. In our view, phrase "Where a dispute....