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2024 (3) TMI 1170 - AT - Central ExciseCENVAT Credit - purchase and sale of goods i.e., trading of goods - availing common input services without maintaining separate inventory for the taxable and exempted services in terms of rule 6(2) of the Cenvat Credit Rules (CCR), 2004 - separate accounts are not being maintained for dutiable and exempted services - whether proportionate reversal of credit is sufficient to comply with the relevant CCR, 2004? - period of dispute is July 2014 to June 2017 - HELD THAT:- Rules 6 very clearly establish that the taxpayer has been given an option to reverse the credit along with the interest when common credit is availed on inputs and input services on both dutiable and exempted goods/services. In the case of M/S. SIFY TECHNOLOGIES LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2023 (3) TMI 12 - CESTAT CHENNAI] relied upon by the Revenue, the facts are entirely different and the question there was one who manufactures and clears simultaneously dutiable and exempted goods, various alternatives were provided to the taxpayer and having chosen a particular option, they cannot avail any other option simultaneously and the amended provisions are also not being considered - In the present case, the appellant does not manufacture consciously dutiable and exempted products but at times, trades in goods that were found to be excess and therefore, he was liable to reverse the CENVAT credit availed on the traded goods which are nothing but exempted products. Since the audit officers have noticed this irregularity, the appellant having accepted it, they have reversed the proportionate credit as laid down by Rule 6(3A) of the CCR, 2004 which is one of the options provided to the tax payer. Therefore, the question of denying this option to the appellant is not acceptable. The Hon’ble High Court of Telangana Hyderabad in the case of M/S TIARA ADVERTISING VERSUS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] had observed We may also note that in the event the petitioner was found to have availed Cenvat Credit wrongly, Rule 14 of the Cenvat Credit Rules, 2004 empowered the authorities to recover such credit which had been taken or utilised wrongly along with interest. However, the second respondent did not choose to exercise power under this Rule but relied upon Rule 6(3)(i) and made the choice of the option thereunder for the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. In the case of COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX VERSUS M/S RAJASTHAN PRIME STEEL PROCESSING CENTER PVT LTD., SHRI SACHIN GUPTA, SENIOR EXECUTIVE (ACCOUNTS AND EXCISE) , SHRI RAJPAL SINGH, SENIOR MANAGER (FINANCE AND ADMINISTRATION) AND AUTHORISED SIGNATORY [2019 (8) TMI 1175 - RAJASTHAN HIGH COURT] in a similar set of facts, the Hon’ble High Court observed that “in short, the Revenue argument is that Rule 6(3A) is not nearly procedural but was binding upon the assessee, who could not have claimed the benefit of even proportionate credit or it would have otherwise been entitled to input service for which CENVAT Credit was admissible, without following the procedure the Show-cause notice in this case covers two different periods(2011-16) substantial part of that period was when Rule 6(3A) did not exist - In the present case the period of dispute is after the introduction of Rule 3(A) in the CENVAT Credit Rule 2004 which was introduced from 01.04.2016, and Rule 3 provided an option to pay an amount as determined under subrule (3A) which allowed the appellant to reverse the proportional credit. From the above, it is very clear that even if the manufacturer or a provider of service had failed to exercise the option under subrule (3) will be allowed to pay proportionate credit along with the interest at the rate of 15% per annum from the due date for payment of amount till the date of payment. However, there is nothing on record to show that the appellant has reversed the entire proportionate credit along with interest, therefore the matters needs to be remanded for verifying the same. There are no reason denying the benefit of reversal of proportion CENVAT credit to the appellant - the impugned order is set aside - appeal allowed by way of remand for verification of payment/reversal of the proportional cenvat credit along with interest.
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