2009 (8) TMI 224 - HC - Central Excise

Common inputs used in dutiable as well as exempted product - “Whether the Hon’ble Tribunal was right in allowing the assessee for reversal of credit taken, instead of insisting upon the assessee to pay an amount equal to 8% or 10% of total price of the exempted goods as per the Rules 6(3)(b) of Cenvat Credit Rules 2002? – Held that Rule 6 (2) mandatorily applicable once dutiable and exempted final products manufactured from common inputs and credit can be availed only in terms of Rule 6 (3) - Assessee cannot have choice of claiming or reversing credit – impugned order is not justified in holding that payment of 8% or 10% amount not required if credit is reversed on inputs used in exempted goods - It is not open to an assessee to contend that because they have chosen not to maintain the records as required, revenue authorities even against the grain of the language of the rule, must estimate the inputs used in the manufacture of final dutiable products and accordingly, pass necessary orders. It is also not possible to accept the contention that because they are familiar with the procedure of ascertaining the amount of credit, that by itself makes rule 6(3)(b) directory - Pro rata credit it is submitted has been statutorily provided in Cenvat Credit Rules 2004 with effect from 1-4-2008 and the principles and basis enshrined in those rules can be applied for the past period – Held that Once there be rules in force, it is those rules which are to be applied. Rules subsequently made may be as a result of experience cannot be made retrospective unless so provided - We may also mention that hardship cannot result in giving a go-by to the language of the rule and making the rule superfluous - As noted a provision or a rule can occasion hardship to a few, that cannot result in the rule being considered as absurd or manifestly unjust. The difficulty in maintaining separate accounts had been realized by providing for a presumptive tax.