TMI Blog2018 (12) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant is that the payment of cenvat credit was made belatedly, however the appellant have paid interest for the period right from availing the cenvat credit till the payment/reversal of proportionate cenvat credit which create a position as if the appellant have not availed cenvat credit right from the date when cenvat credit was availed. Therefore there is no reason for imposing option under Clause (i) of Rule 6(3) i.e. payment of 5%/10% of the value of exempted goods - the demand confirmed equal to 5%/10% of value of the exempted goods is not sustainable. Time Limitation - Penalty - Held that:- Since the issue regarding reversal of cenvat credit under Rule 6(3) is contentious and various cases on the same issue have been made out which can be seen from such of judgment given above, therefore, on the issue related to Rule 6(3) particularly in the facts of the present case it cannot be said that the appellant had malafide intention to evade payment of duty. Therefore, demand for the extended period is also hit by limitation for the same reason the penalties imposed are also unsustainable. The proportionate credit paid by the appellant along with interest is sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of common input services and used in the manufacture of dutiable final goods as well as exempted goods i.e. Steam and Fly-Ash and non excisable goods namely, electricity sold to independent buyers outside the factory. It was contended by the Revenue that with regard to the exempted goods i.e. Steam and Fly-Ash, the appellant is liable to pay 5% / 10% of the value of such goods in Terms of Rule 6(3) of Cenvat Credit Rules, 2004 and equivalent cenvat credit attributing to the electricity sold outside the factory on the ground that the electricity is not excisable goods and credit can be availed only in respect of input used in excisable goods in terms of Rule 2K of Cenvat Credit Rules, 2004. A SCN was issued whereby the demand of ₹ 12,11,80,520/- was proposed under Rule 6(3) of Cenvat Credit Rules, 2004 for the period 2007-08 to 2010-11 in respect of Steam and Fly-Ash sold outside the factory. A demand of cenvat credit amounting to ₹ 86,89,075/- was also proposed which is attributed to input services used in or relation to the generation of electricity sold outside the factory for the period 2007-08 to 2010-11 under Rule 14 of Cenvat Credit Rule, 2004 read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 661 (Guj) Star India Private Ltd (2005) 7 SCC 203 Bombay Dyeing Mfg. Co. Ltd reported in 2007 (215) ELT 3 Star Coolers Condensers (P) Ltd 2017 (352) ELT 77 (T) Genus Electrotech Ltd 2013 (296) ELT 175 (Guj) Mercedes Benz India (P) Ltd reported in 2015 (40) STR 381 Aster P. Ltd reported in 2016 (43) STR 411 Rathi Daga 2015 (38) STR 213 (Tri.Mum) Foods, Fats Fertilisers Ltd 2009 (247) ELT 209 (Tri.Bang) Cranes Structural Engineers reported in 2017 (347) ELT 112 (Tri.Bang) IVP Ltd 2017 (349) ELT 18 (Bom) INd. Power Ltd 2017 (347) ELT 352 (T) ICMC Corp. Ltd 2015 (315) ELT 388 (Mad) He further submits that the demand is not sustainable for the reason that during the period up to 2010, due to serious ambiguity in operation of Rule 57CC and subsequently Rule 6 for providing mechanism for reversal of cenvat credit attributed to exempted goods/ services, the retrospective amendment was brought in the Finance Act, 2010, whereby it was provided that the dispute can be settled by reversing the proportionate cenvat credit attributing to the exempted goods, therefore on that basis also the reversal made by appellant along with payment of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing decision it is held that penalty under Rule 15 cannot be imposed if wrongful availment of credit is lying undisputed in the Cenvat Credit Register. Grasim Bhiwani Textiles Ltd 2016 (332) ELT 865 (T) Strategic Engineers (P) Ltd 2014 (310) ELT 509 (Mad.) Tata Business Support Service Ltd 2017 (52) STR 346 (T) Multiservice Rolls Ltd 2007 (215) ELT 119 (T) 5. Sh. J Nagori Ld. Additional commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 6. We have carefully considered the submissions made by both the sides and perused the records. The limited issue to be decided by us is that in a case where at the time of receipt of input services, the appellant availed cenvat credit on the entire service and on pointing out by the audit party they reversed the cenvat credit in respect of input services attributed to the exempted goods/non excisable goods along with interest, whether the demand confirmed by the Revenue under Rule 6(3) i.e. 5%/10% on value of exempted goods is legal and proper. The appellant is not disputing that the cenvat credit in respect of input services attributed to exempted goods namely Steam, Fly-As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant have not availed cenvat credit right from the date when cenvat credit was availed. Therefore there is no reason for imposing option under Clause (i) of Rule 6(3) i.e. payment of 5%/10% of the value of exempted goods. This issue has been considered by this Tribunal time and again, though the appellant have relied upon almost 20 judgments on this issue which are directly applicable. However, we are referring some of the judgments as under: The Hon ble Tribunal in the case of Jay Balaji Industries Ltd 2017 (352) ELT 86 (T) held in para 5 that: 5. The Hon ble Supreme Court in the case of Chandrapur Magnet Works (P) Ltd. v. CCE, Nagpur - 1996 (81) E.L.T. 3 (S.C.) which has been followed in many other decisions of the High Court as well as the Tribunal has held that once Cenvat credit is reversed, it is to be considered ab initio not availed. In the light of this judgment of the Hon ble Supreme Court, the reversal of Cenvat credit already made by the appellant is to be considered as not taken ab initio. The Government has introduced the facility of proportionate reversal w.e.f. 1-4-2008 to mitigate the difficulties faced by manufacturers to maintain sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent claims that the input credit attributable to manufacture of exempted final products is only ₹ 7,85,573/-, which they have reversed. In the present case we observed from the case records that the appellant has furnished relevant data/documents available at pages 372 to 396 of the appeal papers filed in Appeal No. E/449/2011 showing Cenvat credit reversed/required to be reversed on inputs used in the manufacture of exempted final products during the material period. The appellant has also placed on record copies of 21 invoices at pages 349 to 370 of the appeal papers of Appeal No. E/449/2011 showing receipt of exempted input (Alpha Beta Arteether) of value of about three crore rupees during the material period, for which no Cenvat credit could be taken. In view of these facts on record, we find that the method adopted by the adjudicating authority for working out of the demand of ₹ 88,41,543/-, on the basis of 8% or 10% of the sale price of dutiable and exempted final products, is not maintainable. We, therefore, remand the matter to the adjudicating authority for proper verification of appellant s claim of reversal of Cenvat credit on inputs attributable to man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s choice to avail second option of reversing the proportionate credit. Rule 6(3A), as seen expressly stated is nothing but a procedure contemplated for application of Rule 6(3). Therefore, the argument of the Revenue that the requirement to intimate the department about the option exercised, is mandatory and that on failure, the appellant has no other option but to accept and comply Rule 6(3)(i) and make payment of 5%/10% of sale price of exempted goods/value of exempted services is not acceptable or convincing. The Rule does not lay down any such restriction. The procedure and conditions laid in Rule 6(3A) is intended to make Rule 6(3) workable and not to take away the option available to the assessee. In any case, at no stretch of imagination can it be said that on failure to intimate the department, Rule 6(3)(i) would automatically come into application. The Hon ble Tribunal in the case of Cranes Structural Engineers 2017 (347) ELT 112 (T) held in para 4.1 that: 4.1 On analysis of Rule 6(3A), I find that while exercising the option, the manufacturer of goods or the provider of output service shall intimate in writing to the Department regarding the option e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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