TaxTMI 
TaxTMI 
2026 (8) TMI 853
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....y Foods Pvt. Ltd., is engaged in the manufacture of biscuits classifiable under the Central Excise Tariff Act, 1985. During the financial years 2010-11 to 2015-16, the respondent manufactured both dutiable biscuits and biscuits exempt from payment of central excise duty. The exemption was available to packaged biscuits having a retail sale price not exceeding Rs. 100 per kilogram in terms of the notification no. 12/2012-CE. 3. For the manufacture of both dutiable and exempted products, the respondent utilised common inputs and input services. Under Rule 6 of the CENVAT Credit Rules, 2004, an assessee using common inputs for the manufacture of dutiable as well as exempted goods is required either to maintain separate accounts in respect of such inputs or to comply with one of the statutory mechanisms prescribed under Rule 6(3) of the Credit Rules, including payment of a specified percentage of the value of exempted goods or reversal of proportionate CENVAT credit in accordance with the procedure prescribed under Rule 6(3A) of the Credit Rules. 4. During departmental audit and scrutiny of the respondent's ER-1 returns, it was noticed that the respondent had not maintained s....
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....to the respondent despite undisputed non-compliance with the prescribed statutory procedure. 9. The Learned Counsel for the appellant submits that the respondent, a manufacturer of biscuits, was engaged in the manufacture of both dutiable goods and exempted goods, namely biscuits having a retail sale price not exceeding Rs. 100 per kilogram. It is an admitted position that common inputs and common input services were used in the manufacture of both categories of goods. However, the respondent failed to maintain separate accounts for receipt, consumption and inventory of such common inputs and input services as mandatorily required under Rule 6(2) of the CENVAT Credit Rules, 2004. Having failed to maintain separate accounts, the respondent was statutorily obliged to exercise one of the options prescribed under Rule 6(3) of the Credit Rules, namely, either to pay the prescribed percentage of the value of exempted goods or to determine and reverse proportionate credit strictly in accordance with the procedure laid down under Rule 6(3A) of the Credit Rules. Instead of complying with either of the statutory options, the respondent adopted a self-devised mechanism of reversing certain....
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....ed goods, there would have been no occasion for it to advance submissions regarding subsequent reversal of such credit. The very defence advanced by the respondent proceeds on the basis that common credit had in fact been availed. The adjudicating authority, after detailed examination of the records, had categorically noticed serious evidentiary deficiencies. Chartered Accountant certificates for the financial years 2010-11 and 2012-13 were not produced at all. Even for the financial years 2013-14 and 2014-15, the figures contained in the certificates were neither reconciled with the statutory records nor reflected in the respondent's replies furnished before the departmental authorities. In the absence of such reconciliation, the respondent failed to establish that the amounts allegedly reversed represented the actual proportionate credit attributable to exempted goods. 13. The appellant further submits that the respondent also failed to comply with the mandatory procedural requirements contained in Rule 6(3A)(g) of the Credit Rules, which obligates an assessee to intimate the jurisdictional Superintendent within fifteen days regarding payments, adjustments or interest rela....
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....v. Union of India reported in [2019 (30) G.S.T.L. 474 (Telangana)] is wholly misconceived and distinguishable. In that case, Rule 14 of the Credit Rules had not been invoked by the authorities. In the present case, however, Rule 14 was specifically invoked in the show cause notice on account of the respondent's failure to comply with the mandatory requirements governing proportionate reversal under Rule 6(3A), thereby rendering the said decision wholly inapplicable. 16. It is therefore submitted by the Learned counsel that once the respondent failed to comply with the mandatory conditions prescribed under Rule 6 and Rule 6(3A), it forfeited its entitlement to claim the benefit of proportionate reversal of credit. Therefore, the respondent became liable to discharge the amount prescribed under Rule 6(3), namely 5% or 6% of the value of exempted goods, as applicable during the relevant period, together with applicable interest and consequential penalties under law. The Learned Tribunal failed to deal with or dislodge the detailed findings recorded by the adjudicating authority regarding the respondent's statutory defaults and instead, proceeded on assumptions unsupported b....
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....spondent had either not availed credit for exempted goods or had reversed the proportionate credit as required. The respondent highlights that the department's challenge to this order on the grounds of "perversity" is meritless. While the appellant revenue claims that CA certificates were not submitted, the respondent has filed a supplementary affidavit to bring on record all intimation letters for financial year 2010-11 to 2015-16, as well as the specific CA certificates for those years. This includes a consolidated CA certificate dated August 02, 2016 covering the period from financial year2010-11 to2014-15. 21. The respondent maintains that the entire issue is factual in nature. The Hon'ble Tribunal reached its conclusion after reviewing the records and observing that the respondent had indeed complied with the reversal requirements. As held by various High Courts in cases such as Commissioner v. Aries Pharmaceuticals reported in 2010 (253) E.L.T.A138 (Bom.) and Commissioner v. Jai Balaji Industries Ltd. reported in 2017 (356) E.L.T. A48 (Chattisgarh), findings by the Tribunal regarding compliance with Rule 6 are factual findings. Since no perversity has been established in t....
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....'ble Court take the additional documents on record, recognize that no substantial question of law is involved and dismiss the Department's appeal with costs. 26. Having heard learned counsel for the parties and upon perusal of the pleadings and materials on record, this Court notes that the respondent manufacturer was engaged in the production of biscuits, some of which were dutiable and others which were exempt from excise duty under Notification No. 12/2012-CE. In the course of these operations, the respondent utilized common inputs and input services for both categories of goods. Under the statutory framework of Rule 6 of the Cenvat Credit Rules, 2004, an assessee using common inputs is required to either maintain separate accounts or follow one of the compliance mechanisms provided in Rule 6(3) to ensure that credit is not retained for inputs used in exempted products. The respondent in this case elected to reverse proportionate credit in accordance with the formula and procedure prescribed under Rule 6(3A). 27. The Revenue's challenge to the Tribunal's order is primarily based on the assertion that the respondent failed to strictly adhere to the procedural requiremen....