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M/s. IPCA Laboratories Ltd. Versus C.C.E Indore

2015 (10) TMI 2325 - CESTAT NEW DELHI

Applicability of Rule 6(3)(b) - Whether just because the appellant did not maintain separate account and inventory of the input services meant for dutiable and exempted final product as per the provision of Rule 6(2) the provisions of Rule 6(3)(b) providing for payment of an amount equal to 10% of sale value of the exempted final product would be applicable - Held that:- w.e.f. 01.03.2008 Rule 6(3) had been amended to give an additional option to a manufacture manufacturing dutiable as well as e .....

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above provisions were made retrospectively applicable. Hon ble Gujarat High Court in case of Sh. Rama Multitech Ltd. vs UOI reported in [2011 (2) TMI 575 - GUJARAT HIGH COURT] has held that even if a separate account have not been maintained, in view of retrospective amendment by Finance Act, 2010, a manufacturer using common inputs in or in relation to manufacture of dutiable as well as exempted final product would be entitled to reverse the proportionate cenvat credit. In view of this position .....

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ntum of input services used in or in relation to manufacture of exempted final product and by foregoing this credit, they have complied with this obligation. In view of this the impugned order is not sustainable. The same is set aside - Decided in favour of assessee. - Excise Appeal No. E/1021/2009 -Ex[DB] - FINAL ORDER NO. 51560/2015-Ex(Br) - Dated:- 6-5-2015 - Mr. Rakesh Kumar, Member (Technical) and Mr. S.K. Mohanty, Member (Judicial) Mr. B.L. Narsimhan, Advocate for the Appellant Mr. MS Negi .....

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and analysis service in or in relation to the manufacture of dutiable final product as well as exempted final products. However, they were not taking the cenvat credit in respect of these input services in proportion to the turnover of the exempted final product. During the period of dispute, they were foregoing the cenvat credit in respect of the 6 common input services mentioned above to the extent of 70%, based on the ratio of the turnover of dutiable and exempted final product during the pre .....

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rvices meant for dutiable final product and exempted final product had not been maintained as per the provisions of Rule 6(2) of Cenvat Credit Rules, 2004, the provisions of Rule 6(3)(b) would become applicable. It is on this basis that after issue of Show Cause Notice, the Commissioner vide Order-in-Original dated 19.01.2009 confirmed the demand of ₹ 5,75,52,022/- against the appellant under Rule 6(3)(b) read with Rule 14 of the Cenvat Credit Rules, 2004 along with interest thereon under .....

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respect of 6 common input services, in question, in proportion to the turnover of the exempted final product during the previous financial year and accordingly out of total cenvat credit of ₹ 15,52,417/- involved on the common input services mentioned above, they have foregone the credit of ₹ 10,86,692/- and have only taken the credit of ₹ 4,65,725/- in proportion to the use of the common services in or in relation to the manufacture of dutiable final product and hence, the pro .....

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01.03.2008 Rule 6(3A) was amended and this amendment gave an additional option to the manufactures of dutiable and exempted final product, using common cenvat credit availed input/ input services and this additional option was to reverse the proportionate cenvat credit in respect of inputs/ inputs services used in or in relation to manufacture of exempted final product which was determined as per the provision of Rule 6(3A) that by Finance Act 2010, the provisions regarding reversal of proporti .....

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0, even when the separate accounts of the input/ input services meant for dutiable and exempted final product were not maintained, the manufacture is entitled to reverse proportionate credit, that in the present case, the Commissioner has not even disputed the quantum of credit foregone but has invoked the provisions of Rule 6(3)(b) and demanded an amount equal to 10% of the sale value of the exempted final product only on the ground that a separate account and inventory of the input services me .....

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with and hence, the amount equal to 10% of the sale value of the final product cannot be demanded from them. He, therefore, pleaded that the impugned order is not correct. 4. Sh. MS Negi, the Ld. DR defended the impugned order by reiterating the findings of the Commissioner in it. He, in particular, relied upon the judgment of Honble Bombay High Court in case of CCE Thane-I vs Nicholas Piramal (India) Ltd. reported in 2009 (244) ELT 321 (Bom.) wherein it has been held that provisions regarding .....

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spute that during previous financial year, the proportion of the turnover of exempted final product was 70% and on this basis during the period of dispute, the appellant have foregone 70% of the cenvat credit in respect of these mix common input services and accordingly, have availed cenvat credit of ₹ 4,65,725/- attributable to the input services used in or in relation to the manufacture of the dutiable final product and have foregone the cenvat credit of ₹ 10,86,692/- in respect of .....

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manufacture manufacturing dutiable as well as exempting final product by using common cenvat credit availed input/ input services and this additional option was to reverse the proportionate cenvat credit attributable to input/ input services used in or in relation to manufacture of exempted final product. The proportionate amount of cenvat credit attributable to the input/ input services used in or in relation to manufacture of exempted final product was to be calculated as per the formula presc .....

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