TMI Blog2016 (12) TMI 1379X X X X Extracts X X X X X X X X Extracts X X X X ..... the input used for the exempted goods is in order. therefore no further demand could have been made from the appellant. Appeal allowed - decided in favor of appellant. - APPEAL NO. E/1762/10 - ORDER No.A/88016/16/SMB - Dated:- 16-6-2016 - Mr Ramesh Nair, Member(Judicial) Shri. J.H. Motwani, Advocate for the Appellants Shri. R.K. Maji, Dy. Commissioner(A.R.) for the Respondent Per : Ramesh Nair This appeal is directed against Order-in- Appeal No. AGS(127) 129/2010 dated 24/6/2010 passed by the Commissioner of Customs Central Excise(Appeals), Aurangabad whereby Ld. Commissioner(Appeals) upholding the Order-in-Original No.09/C. Ex./Addl. Commr./2010 dated 19/3/2010 rejected the appeal filed by the appellant. 2. The fact of the case is that the appellant are engaged in the manufacture of dutiable as well as exempted product. On the exempted product they were reversing the Cenvat credit attributable to the input used in the manufacture of exempted goods on proportional basis, though they had not exercised this option in writing in terms of subrule (3A) (a) of Rule 6 of Cenvat Credit Rules, 2004. The show cause notice was issued on the allegation that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d he submits that adjustment is permissible in light of following judgments: (a) Vinir Engineering Pvt. Ltd. Versus Commissioner of C. EX., Bangalore [2004 (168) E.L.T. 34 (Tri. - Bang.)] (b) Collector of Central Excise, Hyderabad Versus Divya Enterprises Ltd. [2003 (153) E.L.T. 497 (S.C.)] 4. On the other hand, Shri. R.K. Maji, Ld. Dy. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that since the appellant have not opted the option of payment of equivalent Cenvat credit in writing, therefore they were required to pay 10% of the value of the exempted goods. Both the lower authorities have rightly confirmed the demand. In support of his submission he placed reliance on Hon ble Bombay High Court decision in case of Commissioner of C. Ex. Thane-I Vs. Nicholas Piramal (India) Ltd[2009(244) ELT 321(Bom.)]. 5. I have carefully considered the submissions made by both sides and perused the record. 6. I find that as per amended Rule 6(3) (i) (ii) read with subrule (3A), the option is available to the assessee whether to pay 10% of the value of the exempted goods or to pay equivalent Cenvat credit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory. Explanation 2 . - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder.] [(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for- (a) the receipt, consumption and inventory of inputs used- (i) in or in relation to the manufacture of exempted goods; (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services- (i) in or in relation to the manufacture of exempted goods and their clearance upto the place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total sale of the trading turnover of goods on the ground that option provided under Rule 6 (3) (i) is applicable on the ground that claim of the appellant on the option provided under Rule 6(3)(ii) is not available for the reason that appellant has not complied with condition provided under sub Rule (3A) of Rule 6 which provides that manufacturers of the goods shall follow certain procedure and conditions as provided under Sub Rule (3A)(a) (i) to (iv) inasmuch as the appellant have not given said information in writing to the Jurisdictional Superintendent of Central Excise. Secondly the appellant, as provided under Clause (b) of sub rule (3A) have not paid the amount of Cenvat on monthly basis and paid after almost 11 months. 5.1 We have observed that in Rule 6(3) prevalent at the relevant time, two options have been provided:- (i) Payment of 5% on value of exempted services. (ii) Payment of an amount equal to the Cenvat Credit amount attributed to input services used in or in 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cising this option is required to intimate in writing to the Jurisdictional Superintendent, Central Excise, the following particulars namely: (i) Name, address and registration No. of the manufacturer of goods or provider of output service; (ii) Date from which the option under this clause is exeertised or proposed to be exercised; (iii) Description of dutiable goods or taxable services; (iv) Description of exempted 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 alongwith 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 submitted alongwith appeal papers, it is observed that the particulars, as required under clause (a) of sub rule (3A) of Rule 6 has been produced to the range superintendent. Therefore all the particulars which are required to be intimated to the Jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. It is also observed that in either of the three options given in sub rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% will automatically be applied. Therefore we do not understand that when the appellant have categorically by way of their intimation opted for option provided under sub-rule (3)(ii), how Revenue can insist that option (3)(i) under Rule 6 should be followed by the assessee. 5.5 As discussed above and in the facts of the case that actual Cenvat credit attributed to the exempted services used towards sale of the bought out cars in terms of Rule 6(3A) comes to ₹ 4,06,785/- where as adjudicating authority demanded an amount of ₹ 24,71,93,529/-. In our view, any amount, over and above ₹ 4,06,785/- is not the part of the Cenvat Credit, which required to be reversed. The legislator ..... X X X X Extracts X X X X X X X X Extracts X X X X
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