2018 (3) TMI 985 - AT - Central Excise

Reversal of Cenvat Credit - Non-payment of amount on monthly basis as per the provisions of Rule 6(3A) of Cenvat Credit Rules - demand of an amount equal to the 10% of the value of the exempted goods under sub-rule (3)(i) of Rule 6 of the CCR - Held that - considering that the intimation regarding closing balances was submitted within three days of filing their option, it appears that the same has been done within the reasonable period and the Revenue s contention in this regard is not tenable - the Board s Circular dt. 09.05.2008 laid down that the calculation of Cenvat credit attributed to inputs is to be done on the basis of actual consumption of inputs used and the quantification may be made based on the stores/production records maintained by the manufacturer. Since, the appellants have done the same on actual monthly basis and a certificate from the Chartered Accountant was submitted at the end of the year, the Revenue is not prejudiced by the approach based on actual consumption in accordance with Board s Circular dt. 09.05.2008. Tribunal in the case of M/s Mercedes Benz India (P) Ltd vs CCE, Pune-I 2015 (8) TMI 24 - CESTAT MUMBAI has held that we do not understand that when the appellant have categorically by way of their intimation opted for option provided under sub-rule (3)(ii), how Revenue can insist that option (3)(i) under Rule 6 should be followed by the assessee. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Non-maintenance of separate accounts for inputs and input services.
2. Non-payment of 10% of the value of exempted goods.
3. Non-compliance with Rule 6(3A) of the Cenvat Credit Rules, 2004.
4. Validity of the intimation and declaration filed by the appellants.
5. Adjudicating authority’s confirmation of demand and imposition of penalty.

Detailed Analysis:

1. Non-maintenance of separate accounts for inputs and input services:
The appellants, manufacturers of Paper and Sulphuric Acid, did not maintain separate accounts for inputs and input services used for both exempted and dutiable goods as required under the Cenvat Credit Rules, 2004 (CCR, 2004). This led to the issuance of show cause notices by the Revenue.

2. Non-payment of 10% of the value of exempted goods:
The appellants were also accused of not paying the amount equal to 10% of the value of the exempted goods. The Revenue argued that the appellants neither maintained separate accounts nor paid the required amount or followed the procedures under Rule 6(3A) of the CCR, 2004.

3. Non-compliance with Rule 6(3A) of the Cenvat Credit Rules, 2004:
The Revenue contended that the amounts reversed by the appellants were not as per the formula prescribed in sub-rule (3A)(b) of Rule 6 of the CCR, 2004. Additionally, the appellants did not determine and pay the amount provisionally on a monthly basis as required under Rule 6(3A).

4. Validity of the intimation and declaration filed by the appellants:
The appellants argued that they had filed a declaration regarding the option under Rule 6(3)(ii) of CCR, 2004, effective from 01.04.2008, which was acknowledged by the Superintendent of Range Office, Barnala. The Revenue’s objection that the letter was not given to the dealing hand was found to be frivolous as the receipt of the letter in the Range Office was not contested. The Tribunal found that the intimation regarding closing balances submitted within three days of filing their option was done within a reasonable period, and the Revenue’s contention regarding late filing was untenable.

5. Adjudicating authority’s confirmation of demand and imposition of penalty:
The adjudicating authority confirmed the demands and imposed equivalent penalties, adjusting the amounts already reversed by the appellants. However, the Tribunal found that the appellants had substantially complied with the provisions of Rule 6(3)(ii) of CCR, 2004. The Tribunal referenced the case of M/s Mercedes Benz India (P) Ltd vs CCE, Pune-I, where it was held that the assessee has the liberty to choose the option under Rule 6(3) and that the Revenue cannot insist on a particular option. The Tribunal concluded that the demand confirmed by the adjudicating authority was not sustainable.

Conclusion:
In view of the findings and by following the judgment in the case of M/s Mercedes Benz India (P) Ltd vs CCE, Pune-I, the Tribunal set aside the order of the adjudicating authority. The appeal filed by the appellant was allowed, with the operative part pronounced in the court.