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2023 (10) TMI 1081 - AT - Central ExciseRecovery of CENVAT Credit along with interest and penalty - applicability of scheme of neutralisation - trading activity - input service used in common to the extent attributable to ineligible activity - rule 6(3) of CENVAT Credit Rules, 2004. HELD THAT:- The scheme of neutralisation is to be exercised only by the assessee. Furthermore, it is also abundantly clear that rule 6 of CENVAT Credit Rules, 2004 merely sets out the scheme of neutralisation and entirely for the assessee to comply with; any failure thereto was to be set right under the authority of rule 14 of CENVAT Credit Rules, 2004. In re Mercedes Benz India (P) Ltd, [2015 (8) TMI 24 - CESTAT MUMBAI] it was held that We also note that trading of goods was considered as exempted service from 2011 only, thus it was initial period. We are also of the view that there is no condition provided in the rule that if a particular option, out of three options are not opted, then only option of payment of 5% provided under Rule 6(3)(i) shall be compulsorily made applicable, therefore we are of the view that Revenue could not insist the appellant to avail a particular option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6(3)(ii). Thus, it is clear that exercise of option vests entirely with assessee at any stage and proceedings under rule 14 of CENVAT Credit Rules, 2004 would have to be restricted to that which is least detrimental to the assessee. The demand based on the harshest of the options as ordered by the original authority does not sustain. However, in having taken that extreme step, the claim of the appellant that obligation contemplated in the scheme has been duly complied with was not ascertained. The discharge of the obligation must be in consonance with the computation envisaged in rule 6 of CENVAT Credit Rules, 2004. The matter remanded back to the original authority who shall limit proceedings under rule 14 and rule 15 of CENVAT Credit Rules, 2004, if any, only to deficit, if any, in compliance as set out - impugned order set aside.
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