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TMI Blog2015 (2) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of dutiable as well as exempted goods and since they do not maintain separate accounts and inventory of the inputs and input services used for manufacture of dutiable items and the inputs and input services used for manufacture of exempted items, in accordance with the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, they would be liable to pay an amount equal to 5%/10% of the sale value of the exempted goods. It is on this basis that a show cause notice dated 29.03.2010 was issued for recovery of an amount of Rs. 2,08,96,245/- for the period from 1.4.2005 to 31.08.2009 along with interest thereon under Section 11 AB and another show cause notice dated 20.10.2010 was issued for recovery of an amount of Rs. 15,92,240/- for the period from 1.9.2009 to 31.03.2010 along with interest thereon under Section 11 AB. Both the show cause notices, in addition to recovery of the amount payable under Rule 6(3) of Cenvat Credit Rules, 2004 along with interest, also sought imposition of penalty on them under Rule 15 of the Cenvat Credit Rules, 2004. 1.2 W.e.f. 1.3.2008, Rule 6 (3) of the Cenvat Credit Rules, 2004 was amended so as to give an additional option to every ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat Credit Rules, 2004 made by Section 73 of the Finance Act, there was no scope for demanding from the assessee an amount equal to 5% /10% of the sale value of the exempted final product, if the assessee is ready to reverse the actual cenvat credit attributable to the input and inputs services used in or in relation to the manufacture of the exempted final products. The Tribunal also observed that Commissioner has not given any proper reason as to why the benefit of Section 73 of the Finance Act, 2010 is not applicable for the period from April, 2008 to March, 2010 and that the benefit of Section 73 of the Finance Act would be available for this period also. The Tribunal observed that if the calculation submitted by the appellant is not correct, the commissioner has to calculate the credit amount to be reversed explaining the method he proposes to adopt after giving an opportunity of being heard. Accordingly, the Tribunal remanded the matter to the Commissioner for re-quantification of the cenvat credit to be reversed for the period from April, 2008 to March, 2010. The Tribunal also set aside the penalty on the appellants on the ground that since the matter involved interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the open court, it was recorded that the penalties are set aside but the same is not appearing in the final order issued subsequently. On verification of the proceedings recorded, we find that the submission is correct. We also note that there is an error in numbering of the paragraphs in the order. These mistakes need rectification. 3. In view of the above position, we make the following corrections in the said final order: "The last paragraph of the order shall be numbered as 11 instead of 10 . 5. After paragraph so renumbered as 11, the following paragraph is added: "12. Since the matter involves interpretation of law, we find it proper to set aside the penalties imposed by the impugned order. The matter is remanded only for re-deciding the quantum of credit to be reversed." 6. The ROM is allowed accordingly. 15. In de novo proceedings, which resulted in the impugned order dated 22.12.2013 being passed by the Commissioner, the Commissioner in para 1 to 6 of her order, after taking note of the Tribunal s directions and also the orders regarding setting aside of penalty, as mentioned above, and also observing that the Tribunal s final order and miscellaneous o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of law, imposition of penalty is not called for, that these observations and directions of the Tribunal have been duly noted by the Commissioner in para 1 to 6 of the impugned order, that the Commissioner in para-6 of the impugned order has also mentioned that the aforesaid final order and misc. order of the Tribunal have been accepted by the Committee of Commissioners as confirmed by the Superintendent(Review) vide letter no.IV-131/R/2012/5219 dated 20.04.2012 and no.1935 dated 24.12.2012 and that de novo proceedings are being conducted in compliance of the final order of the Tribunal, that in spite of this, the commissioner has not considered the appellant s plea that during the period of dispute i.e. during the period from April, 2008 to March, 2010, they had not taken the cenvat credit in respect of the inputs/input services used in or in relation to the manufacture of exempted final products in spite of the information in this regard having been furnished by the appellant, that the Commissioner has wrongly once again confirmed the demand of Rs. 95,51,744/- under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 calculated on the basis of 5%/10% of the value of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or in relation to the manufacture of exempted final products and this amount was to be determined subject to the conditions and the procedure prescribed in sub-rule (3A) of Rule 6. By Finance Act, 2010, a retrospective amendment was made to Rule 6 of Cenvat Credit Rules, 2004 and the option of reversing the actual credit by a manufacturer using common cenvat credit availed inputs/input services for manufacture of dutiable as well as exempted final products become applicable w.e.f. 10.09.2004. In this case, the department s allegation is that the appellant had not maintained separate account and inventory of the inputs and input services used in or in relation to the manufacture of dutiable and exempted final products and on this basis, demand of Rs. 95,51,744/- has been confirmed on the basis of 5%/10% of the value of the exempted final products cleared during the period 1.4.2008 to March, 2010. However, the Tribunal vide Final Order dated 27.02.2012 read with misc. order dated 11.06.2012 in respect of ROM application, has held that the appellant even for the period from April, 2008 to March, 2010, would be eligible for the benefit of Section 73 of Finance Act, 2010 and according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The Commissioner s reasoning for confirming the demand on the basis of Rule 6(3)(i) i..e on the basis of 5%/10% of the sale value of the exempted final products is that (a) retrospective amendment by Section 73 of the Finance Act, 2010 is not applicable for period beyond 31.03.2008; and (b) the benefit of amendment to Rule 6(3) by notification no.10/08-CE(NT) dated 1.3.2008 is not applicable for availing the option as per clause (ii) of Rule 6(3) of reversing the cenvat credit attributable to input/input services used in or in relation to manufacture and clearance of exempted goods as far this purpose a written option is required to be given to the jurisdictional Superintendent of Central Excise in terms of Rule 6(3A) and in this case, no such option given by the assessee is on record. However, while giving the above findings, the Commissioner has maintained total silence on the pleas of the Appellant, as recorded in para 8 of her order, that during the period of dispute, they had been maintaining separate account for receipt and consumption of the inputs & input services meant for the manufacture of exempted final products and they had not taken cenvat credit in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trictly as per the Tribunal s order i.e under Rule 6(3) (ii) read with the formula prescribed in Rule (3A) and in this regard, the Commissioner shall consider the Appellant s plea that they, during this period, have not taken the credit in proportion to the inputs/input services used in on in relation to manufacture of exempted final products and also the reports of Asstt. Commissioner of Central Excise, Agra to Asstt. Commissioner (Adjudication) on this issue. In view of the Tribunal s final order dated 27.12.2012, the Commissioner cannot once again go into the question of applicability of the provisions of Rule 6(3)(ii).Since the Tribunal had set aside the penalty, in de novo proceedings, the Commissioner cannot decide to impose the penalty again. 14. The conduct of the Commissioner in passing the impugned order, which was in course of de-novo proceedings in pursuance of the Tribunal s Final Order dated 27.12.2012 read with Misc. Order dated 11.06.2012 and by which the demand under Rule 6(3) (i) of an amount of Rs. 95,51,744/- along with interest on it under Section 11 AB has been confirmed and penalty of equal amount has been imposed, is depreciable, as the Tribunal had given a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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