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2023 (1) TMI 1046 - AT - Central ExciseCENVAT Credit - common input services used in taxable as well as exempt goods - whether the appellant is liable to pay 10% of the value of exempted goods when they have availed the cenvat credit on common input service used in the exempted and dutiable goods however, subsequently, the entire cenvat credit on common input service was reversed? - levy of personal penalty - suppression of facts or not - extended period of limitation - HELD THAT:- This issue has been considered in various judgements as cited by the appellant wherefrom we find that once the assessee has reversed the proportionate credit attributed to the exempted goods, no demand of 10% of the value of goods can be raised by the department. Reversal of proportionate credit is one of the option provided under Rule 6(3). Therefore, it is upto the assessee which option needs to be availed. The department cannot arbitrarily choose any particular option and impose on the assessee. In the present case as per the submission of the appellant, the entire credit of Rs. 22,18,585/- has been reversed on all the common input service used in or in relation to manufacture of dutiable and exempted goods. The adjudicating authority straight away demanded 10% of the value of exempted goods. Therefore, he neither examined the reversal of cenvat credit made by the appellant nor even calculated the proportionate credit. The submission of the appellant also needs to be reconsidered whether the excess amount can be adjusted against the interest. Personal penalty - HELD THAT:- Firstly the appellant company has reversed the credit accordingly, the demand is not prima facie sustainable. Consequently, since the issue relates to the interpretation of Rule 6 of Cenvat Credit Rules, 2004, malafide intention of the present employee with the appellant cannot be attributed. Therefore, considering the facts of the present case, the personal penalty imposed on the appellant is not sustainable. Hence the same is set aside. Appeal allowed in part and part matter on remand.
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