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2016 (3) TMI 804 - CESTAT MUMBAI

2016 (3) TMI 804 - CESTAT MUMBAI - TMI - Cenvat credit on input services used for both excisable goods as well goods chargeable to nil rate of duty - non maintenance of separate records in respect of common services used for the excisable finished goods and exempted finished goods - revenue sought to recover an amount equal to 10% of the value of the exempted goods in terms of sub rule 6 (3) (i) of Rule 6 of the Cenvat Credit Rules, 2004 - Held that:- Revenue is not at liberty to impose any of t .....

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as yet. The Counsel for the appellant has accepted to pay the interest applicable on ineligible credit which is required to be reversed. - In view of the above, it is seen that no option under Rule 6 (3) can be imposed on the appellant and the appellants offer of availing the option of proportionate credit in terms of Rule 6 (3) (ii) cannot be denied to them. However, they will be liable to pay interest on the amounts which are reversed. The order-in-original is set aside and the matter is .....

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ing Cenvat credit on input services which were used for both excisable goods as well as other goods which were chargeable to nil rate of duty. The appellants availed a total credit of ₹ 54,01,113/- during the period July 2008 to June 2009. Since the appellant has not maintained separate records in respect of common services used for the excisable finished goods and exempted finished goods, revenue sought to recover an amount equal to 10% of the value of the exempted goods in terms of sub r .....

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r the appellant argued that the Commissioner has failed to consider the arguments made by them before him. Before the Commissioner, the appellant had argued on following points: i) A number of the services on which demand has been made are covered under the provisions of Rule 6 (5) of the Cenvat Credit Rules. It was argued that in terms of Cenvat Credit Rules no credit needs to be reversed in respect of the credit of ₹ 26,47,687/- taken in respect of services specified in Rule 6 (5) of Cen .....

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unsel argued that Rule 6 (3) provides an option to the appellant and the revenue is at no liberty to choose that option for the appellant. The appellant also relied on the decision of this Tribunal in the case of Maize Products 2009 (234) ELT 431 (Guj) which has been affirmed by the Hon ble Supreme Court. The also relied on the decision of the Mercedes Benz India Pvt. Ltd. - 2015-TIOL-1550-CESTAT-Mum. It was argued that in the said decision it has been held that Rule 6 of the Cenvat Credit rules .....

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of the same. He also relied on decision of Honble Supreme Court in the case of Ind Swift to assert if any other option under Rule 6 (3) is given, the appellant should also discharge liability of interest. 4. We have considered the rival submissions. 5. We find that it is an admitted fact that the appellants have availed credit amounting to ₹ 54,01,113/-. It is not disputed by Revenue that for some of these services in respect of which credit has been taken fall under Rule 6 (5) of the Ce .....

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relation to manufacture of exempted goods or provision of exempted services as provided under sub rule (3A)(b). It is observed that the appellant has availed the option provided under sub-rule (3)(ii) of Rule 6 and paid an amount as per sub-rule (3A) along with interest and intimated the same to the jurisdictional superintendent in writing vide letter dated 14-3-2012. From the perusal of the said letter, we observed that the appellant categorically stated in the said letter that payment of Cenv .....

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common input services, which has been used in relation to the manufacture of the final product as well as for trading of bought out cars. Therefore they are supposed to pay an amount equivalent to Cenvat credit which is attributed to the input service used for exempted service i.e. sale of car. In our view, three options have been provided under Rule 6(3) and it is up to the assessee that which option has to be availed. Revenue could not insist the appellant to avail a particular option. In the .....

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provisional basis, therefore it is not mandatory that whole amount or part of the amount was required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided under sub-rule (3A) of Rule 6, therefore to fulfill the condition, assessee should pay the said amount, which has been complied by the appellant. 5.2 As regard the delay in payment, if any, the appellant have discharged the interest liability on such delay. Regarding the complian .....

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ed goods or exempted services; (v) Cenvat credit of inputs and input services lying in balance as on the date of exercising the option under this condition. As per the submission of the appellant and perusal of their letter along with enclosed details, it is found that more or less all these particulars were intimated to the Jurisdictional Superintendent. The appellant has been filing their returns regularly on monthly basis to the department. On perusal of the copies of the such return submitte .....

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s has admittedly been submitted, we are of the view, as regard this compliance of Rule 6(3A), it stood made. 5.3 As regard the contention of the adjudicating authority that this option should be given in beginning and before exercising such option, we are of the view that though there is no such time limit provided for exercising such option in the rules but it is a common sense that intention of any option should expressed before exercising the option, however, the delay can be taken as procedu .....

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is appellant who have on their own opted for option provided under Rule 6 (3) (ii). The meaning of the option as argued by the Ld. Sr. Counsel is that option of right of choosing, something that may be or is chosen, choice, the act of choosing . From the said meaning of the term option , it is clear that it, is the appellant who have liberty to decide which option to be exercised and not the Revenue to decide the same. It is clear from the above decision that Revenue is not at liberty to impose .....

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follows: 5. The appellant has produced relevant extracts from the relevant Rule of Cenvat Credit Rules, 2002 which relates to obligation of manufacturer of dutiable and exempted products. Under sub-rule (2) of the said Rules, a manufacturer is required to maintain separate accounts regarding inputs used for manufacturing of dutiable products and inputs used for manufacturing of exempted products. However, sub-rule (3) stipulates that, in a case where the manufacturer opts not to maintain separat .....

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