TaxTMI 
TaxTMI 
2023 (9) TMI 715
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....the period upto February 2010. The appellant also cleared Modified Starch which is a dutiable product for home consumption, for export and to EOU and SEZ. The appellant cleared the residue product "Thippy" which arises in the course of manufacture of Tapioca Starch falling under chapter 23031000 to various customers for some consideration under proper invoices for being used in production of animal/cattle feed. The tarrif rate for 'Thippy' is Nil. 2. The enquiries revealed that the appellant is using common inputs (chemicals) for manufacture of dutiable and exempted products of Tapioco Starch and they have not maintained separate accounts for the input used in the manufacture of both dutiable and exempted products. The appellant cannot avail cenvat credit in respect of inputs used in exempted final goods. The appellant had not paid any amount equivalent to 5% / 10% / 6% of value of the exempted products in terms of Rule 6 (3) (i) of Cenvat Credit Rules, 2004. 3. Further, the appellant had not exercised their option as prescribed under Rule 6 (3A) of CCR 2004. It appeared to the department that the appellant has to follow Rule 6 (3) (i) of CCR 2004 if they have not maintained sepa....
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....ls were verified by the Range Officer as directed by the adjudicating authority. The Range Officer has furnished his report OC No.1482/2013 dt. 20.12.2013 wherein the above facts have been verified. 6. Learned counsel argued that the department cannot unilaterally impose a condition of paying an amount of 5% /10% /6% on the value of exempted clearances when the appellant has an option to reverse the proportionate credit. 6.1. It is submitted by the counsel that the issue is no longer res integra. In the case of Tiara Advertizing Vs Union of India - 2019 (30) G.S.T.L. 474 (Telegana), the Hon'ble High Court of Telengana held that Rule 6 (3) does not contemplate that the service tax authorities can choose one of the options on behalf of the service provider. 6.2. The decision in the case of M/s.Nava Bharat Ventures Ltd. Vs CCE Hyderabad - 2011 (11) TMI 426 CESTAT HYDERABAD and Linkwell Telesystems Pvt Ltd. Vs Commissioner of Central Tax, Secunderabad - 2022 (3) TMI 590 CESTAT HYDERABAD were also relied by the learned counsel to submit that the Hon'ble High Court upheld the order passed by Tribunal wherein the demand of duty under Rule 6 (3) (i) and Rule 14 @ 5% /10% / 6% on the val....
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....004 as proposed in the SCN. The second issue is whether the show case notice is barred by limitation. 11. The facts bring out that the appellant has reversed the proportionate credit to the tune of Rs.10,91,346/- along with interest on 05.01.2013. In spite of this, the show cause notice has been issued on 05.03.2013 alleging that the appellant has to pay an amount equivalent to 5% / 10% / 6% of value of exempted final goods for the reason that the appellant has not filed declaration giving the option to the department that they intend to reverse the proportionate credit of the inputs used in the manufacture of exempted products. The issue stands covered by decision in the case of Tiara Advertising (supra). The Hon'ble High court held as under : "14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate ....
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....instead of the office of the Commissioner, it may be technically incorrect but such hyper-technicality should not deprive the assessee of substantial benefit. Similarly, Revenue's argument that interest was paid much later does not hold much water as long as it has been paid. 13. We, therefore, find that reversal of proportionate amount of CENVAT credit by the assessee in this case is not only sustainable under Rule 6(3A) for the period post 1.4.2008 and under Finance Act, 2010 (for the period pre 1.4.2008) but such reversal itself meets the obligations of the assessee under Rule 6(1) (of not taking credit of inputs and input services used in exempted goods) and Rule 6(2) (of maintaining separate accounts). ... ... .... 18. We cannot agree with this submission of the Revenue because if Rule 6 does not apply to the assessee's case, then nothing in this Rule including the demand in the show cause notice or the argument made by the Revenue would survive because all of them are on the premise that Rule 6 applies to the assessee. When Rule 6(5) explicitly excludes some services from the provisions of Rule 6(1), 6(2) or 6(3), the benefit of this cannot be denied to the assessee. Ev....
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....tition, we are of the opinion that the petitioner cannot be non-suited on the ground of availability of an alternative remedy. The alternative remedy principle is not a straitjacket formula but a rule of convenience which has been evolved by Courts so as to ensure equitable distribution of work. It is therefore within the discretion of this Court to refuse to adopt the said rule in a deserving case. Presently, we find that the second respondent has brazenly exercised power under a provision which was not even available to him, as it was an enabling provision put in place for the benefit of the assessee, and arrived at a wholly unreasonable, if not absurd, result. That apart, the second respondent did not even choose to deal with the binding case law cited before him while dealing with the issues arising for consideration. This arrogant and arbitrary approach adopted by the second respondent cannot be countenanced. It would therefore not be necessary for the petitioner to go through the motions of a statutory appeal to challenge the same. The contention of the respondents as to the maintainability of the writ petition is therefore rejected. 14. Further, we may reiterate that Rule ....