TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 396
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....otice, it was alleged that they have taken the Cenvat Credit based on the invoices issued to R.D. Enterprises for decoration of banquet halls and two other parties providing security consultants and Ascon Engineers servicesetc., which as per Revenue , were only used for provision of taxable and exempted services. After due process, the Adjudicating Authority confirmed the demand. Being aggrieved, the Appellant is before the Tribunal. 3. The Ld.Counsel submits that in case of R.D. Enterprises, they have taken total credit of Rs.6,14,107/- and the same was fully reversed along with interest of Rs.1,33,720/- on 27.11.2010. This would amount to the Appellant not having taken any Cenvat Credit at all as has been held by various High Courts and Tribunals. The Appellant submits that before the Adjudicating Authority they have clarified that they have maintained separate records for the input services pertaining to taxable services and input services pertaining to exempted services. For the input services used for exempted services, they were not taking the Cenvat Credit. Only on account of clerical mistake in case of the services provided by the decorator, the Cenvat Credit was taken dur....
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....ssued by the Chartered Accountant. Only on account of clerical mistake and mis-interpretation of the statute, during the period 2008-09 and 2009-10, they have taken the credit for the services received from two decorators on proportionate basis. The 100% credit on account of R.D. Enterprises has been reversed along with interest. Therefore, they submit that no case of suppression with an intent to evade the Excise Duty, has been made out against the Appellant. Hence, the learned counsel prays that the confirmed demand for the extended period may be set aside even on account of limitation. 7. The Ld.AR for the Department reiterates the findings of the lower authority. He points out that the Appellant has taken the credit on account of the service rendered by decorators which have been only used for exempted services. Therefore, he justifies the confirmed demand. 8. Heard both sides and perused the appeal papers and other documents on record. 9. It is alleged that the Appellants have taken the credit on account of services rendered by R.D. Enterprises, Security Consultants and Ascon Engineers, as can be seen from Page 6 of the Show Cause Notice. As pointed out by the Ld.Counsel, t....
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....of the said Circular it was mentioned that the duty paid in the inputs used should be debited, before removal of such exempted final products. Since the Circular in that case required reversal of the credit before removal of the final product, hence the Supreme Court interpreting the said circular has mentioned that they see no reason why the assessee cannot make debit entry before removal of exempted final products. 21. In the present case for the purposes of claiming the benefit of the Notification No. 15/94-C.E., dated 1-3-1994 neither any circular has been issued nor the said circular of 1986 has been made applicable in the notification, which has been issued in 1994. 22. Hence in our opinion the Tribunal was not justified in taking a view that reversal of the credit having been made by the petitioner after removal of the final products the petitioner was not entitled to the benefit of Notification No. 15/94-C.E., dated 1-3-1994. 23. This view of the Tribunal is in our opinion patently erroneous and contrary to the decision of the five Member Larger Bench of the Tribunal as well as three member bench of the Tribunal, and is also contrary to the ratio of the decision of....
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....e 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 rule under which the process could be reversed. It is true that the assessee has not maintained separate accounts or segregated the inputs utilised for manufacture of dutiable goods and duty free goods, as should have been done. But, the Court's attention was drawn to the departmental circular according to which in a case where the manufacturer produces dutiable final products and also final goods which are exempt from duty and it is not reasonably possible to segregate inputs utilised in manufacture of the dutiable final products from the final products which are exempt from duty. Based on this, the Court held that the manufacturer may take credit of duty paid on ....
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....24 of 2009 filed by Commissioner of Central Excise, Ahmedabad against the Judgment and Order dated 8-9-2008 of the High Court of Gujarat at Ahmedabad in Tax Appeal No. 1032 of 2007 with Tax Appeal Nos. 1640 and 1642 of 2007 as reported in 2008 (232) E.L.T. 580 Guj.) (Commissioner v. Ashima Dyecot Ltd.)." 14. Apart from the above decisions, in several cases, the Tribunals and High Courts have been consistently holding that for mere taking of a few thousands worth of Cenvat Credit, the assessee should not be burdened with 6% / 8% of the value of the exempted goods for recovery of the Cenvat Credit. 15. So as to put this issue to rest, with effect from 1.4.2016, the following amendment was carried out to Rule 6 of Cenvat Credit Rules 2004 by insertion of Rule 6 (3AA), which reads as under : (3AA) Where a manufacturer or a provider of output service has failed to exercise the option under sub-rule (3) and follow the procedure provided under sub-rule (3A), the Central Excise Officer competent to adjudicate a case based on amount of CENVAT credit involved, may allow such manufacturer or provider of output service to follow the procedure and pay the amount referred to in clause (ii) ....