TMI Blog2018 (11) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to reverse back the 6% of value of clearances of the exempted goods from the Cenvat credit - the appellant are legally required to reverse back the input credit availed on the inputs going into the exempted final products. Penalty - Held that:- since before the issue of the show cause notice itself the appellants have reversed back the proportionate Cenvat credits and we do not find any malafide intention on the part of the appellant for intentional attempt to evade or mis-use Cenvat credit - penalty under Rule 15 of Cenvat Credit Rules readwith Section 11AC of Central Excise Act, 1944 not warranted. Appeal allowed in part. - Excise Appeal No. 51111 of 2017 - Final Order No. 53259/2018 - Dated:- 12-11-2018 - Shri C.L. Mahar, Member (Technical) And Shri Ajay Sharma, Member (Judicial) S/Shri Amit Jain and Dhruv Tiwari, Advocates for the appellant. Shri M.R. Sharma, Authorized Representative (DR) for the Respondent. ORDER Per. C.L. Mahar :- The brief facts of the matter are that the appellants are engaged in manufacture of leaf springs falling under Chapter 73 of the 1st Schedule to the Central Excise Tariff Act, 1985. The appellants are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has assailed the confirmation of Cenvat credit on the ground that the exemption under Notification 65/95-CX. is akin to the provisions of Chapter X in the erstwhile rules wherein the duty on otherwise excisable goods is remitted when the same are put forth to a specified use and the procedure set out in the said rule is followed. It has also been added that for making the provisions of Rule 6 of Cenvat Credit Rules applicable, there should be two different final products being manufactured by the same manufacturer, wherein one of the final product is cleared on payment of duty and other product is cleared without payment of duty. In such circumstances, the Rule 6 of Cenvat Credit Rules becomes applicable and the appellant would have been liable to reverse back 6% of the value of clearances from the Cenvat credit. It has also been contended that though appellant is contesting the applicability under Rule 6, sub-Rule (3) (i) of the Cenvat Credit Rules in their case however, it prove their bonafides they have on their own reversed back Cenvat credit of ₹ 72,80,640/- for the period covered by the show cause notice dated 03/06/2015 and Cenvat credit of ₹ 17,20,620/- have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of [exempted goods or for provision of exempted services, ] except in the circumstances mentioned in sub-rule (2). [Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.] (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, [ * * *], and manufacturers 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 receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not maintain separate account of Cenvat credit availed on exempted as well as dutiable final products, hence, legally they are required to reverse back the 6% of value of clearances of the exempted goods from the Cenvat credit. 8. While holding the above view we also take shelter of this Tribunal s decision in case of NCS Distilleries/Estates Pvt. Ltd. vs. CCE, Visakhapatnam 2007 (207) E.L.T. 400 (Tri. Bang.). The relevant extract is reproduced below :- 4. In the Adjudication order, the Commissioner has given the manufacturing process elaborately. According to him, for applicability of the Rule 57AD(12) of the Central Excise Rules, 1944/Rules 6(3) of the Cenvat Credit Rules, 2001, the input should be used directly in the manufacture of both the dutiable and exempted goods. In other words, both the aforesaid final products should emerges simultaneously using the common inputs. In the absence of same and in the case the exempted final product emerges at the end of the manufacturing process, then Cenvat credit shall not be allowed. In our view, the Commissioner reads many things with regard to the relevant Rules. The point is whether molasses on which Cenvat credit has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of ₹ 24,71,93,529/- of the total value of the vehicle amounting to. ₹ 494,38,70,577/- sold in the market cannot be demanded. We are also of the view that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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