TaxTMI 
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2024 (6) TMI 491
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....redit towards payment of amount. (ii) I also confirm the demand of Interest due on the aforesaid amount and order for recovery of the same from the aforesaid party under the provisions of Section 75 of the Finance Act, 1994. I also order for appropriation of amount of Rs.46903/- and Rs. 3,457/- deposited by the party as interest. (iii) I impose a penalty of Rs. 200/- (Two Hundred only) per day from the first day when the party was required to take registration till the date party takes registration under Section 77(1)(a) of the Finance Act, 1994, for violation of provisions of Rule 4 of Service Tax Rules, 1994 read with Section 69 of the Finance Act, 1994 Finance Act, 1994, and Rules made there-under. (iv) I impose a penalty of Rs. 10000/- under Section 77(1)(b) of the Finance Act 1994, for violation of provisions of Rule 5 of Service Tax Rules, 1994 and the provisions of Finance Act,1994. (v) I impose a penalty of Rs.10,000/- (Ten Thousand only) under Section 77(1)(c) of the Finance Act, 1994, for violation of various provisions of Finance Act, 1994, and Rules made there-under, in as much as, the party failed in timely furnishing of the desired information (vi) I impose ....
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.... Rules, 2004 and the amount of Rs.2,87,277/- deposited voluntarily by the party aginst the aforesaid dues should not be appropriated. (2) Interest as applicable during the relevant period should not be recovered from them under the provisions of Section 75 of the Finance Act, 1994 read with Rule 6 of the CENVAT Credit Rules, 2004 and interest of Rs.50,360.00/- deposited by the party should not be appropriated. (3) Penalty should not be imposed upon them under Section 76 of the Finance Act, 1994 read with Rule 15 of the CENVAT Credit Rules, 2004 for the contravention of Rule 6 (2) and 6 (3) of the CENVAT Credit Rules 2004 in the instant case. (4) Penalty should not be imposed upon them under Section 77 of the Finance Act, 1994 for the various contraventions as discussed in aforesaid paras. (5) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 read with Rule 15 of the CENVAT Credit Rules, 2004 for the reasons discussed in aforesaid paras. 2.4 The show cause notice has been adjudicated as per the impugned order referred in para 1 above. Aggrieved appellants have filed this appeal. 3.1 We have heard Shri Atul Gupta, Advocate for the appellant a....
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.... 78 of the Finance Act, 1994. 1994 read with Rule 15 of the Cenvat Credit Rules, 2004 70. At first, I take up the said issues mentioned at no. (i) above. It is a settled principle that Cenvat Credit is not available, if input or input services are used in the manufacture of exempted goods or provisions of exempted output services. As a natural corollary, if no duty is payable on final product or output service, credit of duty paid on input or input services cannot be availed 71. The party has taken credit of input services used in or in relation to manufacture of dutiable goods as well as exempted service contrary to the provisions of Rule 6 of the Cenvat Credit Rules,2004. 72. I have gone through the exact provisions of Rule 6 with effect from 01.04.2004 i.e.the date of notification of Cenvat Credit Rules, 2004, and the changes made subsequently up to enactment of the Finance Act, 2010. The provisions of Rule 6 of the Cenvat Credit Rules 2004, are explicitly clear; Sub Rule 1 of Rule 6 states that Cenvat Credit is not allowable on such quantity of input/input services which are used in the exempted goods. As per Sub-Rule 2 of Rule 6 of Cenvat Credit Rules 2004, the manufact....
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....spenser wise records of quantity of CNG gas being sold from each of the CNG station 75. I observe that the departmental allegation is very specific as it says that the party is manufacturing CNG, a dutiable product and paying appropriate duty. At the same time they are trading PNG which is exempted service under Rule 2(e) of the Cenvat Credit Rules,2004 by virtue of Circular No.943/4/2011- CX dated 29.04 2011. The party has taken credit on services like Rent-a-cab, consultancy services, transportation of goods through pipe lines etc., which were used for both types of products. Party has not maintained separate accounts of these inputs services in respect of receipt and use in the dutiable goods as well as for exempted service. I find that the party on the other hand emphasized on the procedure of receipt and further use of natural gas and accounting of natural gas maintained by them. I observe that the party throughout their defence has not mentioned even a single record maintained for receipt and use of inputs as alleged in the show cause notice. They failed to produce any such separate accounts though sought for explicitly, The party also failed to produce any evidence that t....
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....CNG stations such gas immediately gets converted into CNG by use of compressor and is sold to ultimate consumer through dispenser. This is the stage where the measurement of gas takes place, both for the quantity of NG purchased and the quantity sold as CNG to the consumers. Therefore, the process as explained by the party itself establishes that from GAIL, NG is supplied to the stations of CNG through pipeline, from where such natural gas after being compressed, is sold to consumers through dispenser and there is no means to measure the NG. But the moment CNG is supplied to the consumer and is transmitted through the meter, the quantity of gas being received and subsequently converted into CNG and sold to ultimate consumer is determined. The purchase and the sale simultaneously take place as soon as Natural Gas, duly compressed, known as CNG is supplied to the consumer and is transmitted through the meter. It is the stage where measurement of gas takes place and the party makes payment of that quantity of the gas to the ultimate seller i.e, GAIL/BPCL and accounts for in ledger as the quantity received The party has stated that the remaining gas in pipelines is supplied to other us....
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....he law with regard to above submissions. I notice that a detailed procedure has been laid down for calculation and reversal of amount on account of proportionate basis. The procedure as per sub-rule 3(A) of Rule 6 is as under:- (3A) For determination and payment of amount payable under clause (i) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions- (a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the prescribed particular. (b) the manufacturer of goods or the provider of output service shall, determine and pay, provisionally, for every month. (c) the manufacturer of goods or the provider of output service, shall determine finally the amount of CENVAT credit attributable to exempted goods and exempted services for the whole financial year in the prescribed manner. 81. From the above it is clear that with the insertion of Sub-Rule (3) read with the procedure for reversal in sub-rule (3A), it became mandatory for the manufacturer to abide by the law and to follow the procedure as la....
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.... only as per method prescribed and assessee not having choice of claiming or reversing credit - Impugned order holding payment of 8% or 10% amount not required if credit reversed on inputs used in exempted goods, not agreed with - Rule 57CC of erstwhile Central Excise Rules, 1944." 84. And in the para 13 of the aforesaid judgment, it was held by the Hon'ble High Court, Bombay that- "13. On a consideration of Rule 57CC, it is clear that if inputs are used in the manufacture of goods, which are chargeable to duty as well as exempted goods such manufacturer shall pay an amount equal to eight percent of the price (excluding sales tax and other taxes, if any payable on such goods) of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory unless the manufacturer in terms of sub Rule (9) maintain separate inventory and accounts of the receipts and of use of inputs in the manufacture of exempted goods. This rule as both the explanatory note to the Finance Bill and the Budget speech was introduced on the realization that the procedure was cumbersome and it was difficult to determine whether the reversal of credi....
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....upheld - However, credit having not been taken with intention to evade payment of duty, penalty under Rule 15 of Cenvat Credit Rules, 2004 unwarranted - Rule 6 ibid. [paras 8, 10, 11] (iii) Ms Bharat Heavy Electricals Ltd. V/s Commissioner of Cus. &C.Ex. Bhopal reported 2003 (160) E.L.T. 928 (Tri. - Del.)-Final Order No. A/316/2003-NB (C), dated 24- 6-2003 in Appeal No. E/1788/2001-NB(C) holding that:- Cenvat/Modvat - Modvat on inputs - Credit availed on inputs used for manufacture of conditionally exempted final product - No separate inventory and accounts maintained in respect of use of inputs in relation to manufacture of exempted final product - Appellants liable to pay an amount equal to 8% of the price of exempted final product at the time of its clearance as per Rule 57CC(1) of erstwhile Central Excise Rules, 1944 - However, such amount not payable in respect of period prior to insertion of Rule 57CC ibid. [para 5] (iv) M/s Eastern Medikit Ltd. V/s Commissioner of Central Excise,Gurgaon reported in 2009(242)ELT51(Tri.-Del.) Final order No. 442/2009-SM(BR)(PB), dated 13.5.2009 in appeal No. E/. 1897/2005-SM holding that;- "Penalty - Cenvat/Modvat, wrong availment of -....
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....i) of the Credit Rules, by following the procedure in that regard. Accordingly, the audit was of the view that the respondent is liable to pay amount @ 6% of the exempted service, in terms of Rule 6(3)(i) of the Credit Rules. 3. With this background, we heard Sh. H.C. Saini, ld. AR for the Revenue who submits that Revenue has relied on the show cause notice. He submits that the respondent -assessee has neither intimated the department regarding its value in their ER-1 and ST-3 return. 4. On the other hand, Sh. Amit Jain, ld. Advocate for respondent-assessee submits that the respondent has reversed the proportionate credit pertaining to the common input services, for all the years. The same was informed to the department vide several correspondences. He further submitted that since the respondent-assessee has reversed the proportionate credit of common input services availed towards manufacturing as well as trading activity, demand of 5%/ 6% under Rule 6(3)(i) is not sustainable. Further, vide letter dated 29.02.2016, respondent-assessee informed the Department that it had reversed the total common input services credit taken by it for financial year 2013-14 & 2014-15, on a su....
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....on has been examined and decided by the Tribunal in Mercedes Benz India Pvt. Ltd. - 2014 (36) STR 704 (Tri. Mum.). The said decision was affirmed by the Hon'ble Bombay High Court reported in 2016 (41) STR 577 (Bom.) and SKF India Ltd. (ISD) - 2016 (44) STR 61 (Bom.)". 6. Similarly, the issue was dealt with by the Tribunal in the case of Dalmia Bharat Sugar & Industries Ltd., vs. CCE -2017-TIOL-113-CESTAT-DEL where it was observed that- "8. We find that the coordinate Bench of this Tribunal in the case of Mercedes Benz India Pvt. Ltd. v. C.C.E., Pune I 2015 (40) STR 381 (TriMum.) has held that the condition given in Rule 6(3A) to intimate the Department is only procedural matter and the delay of such procedural matter is condonable and therefore, substantive right given in the said Rule cannot be denied for such procedural lapse. The Tribunal has also held that Commissioner cannot insist that assessee should reverse only as per Rule 6(3)(i) but it is the option of the assessee. Tribunal in that case held that as follows: 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 ....