TMI Blog2019 (4) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... to analyse the similar facts and held that the aid requirement of exercising the option is only a procedural one. The main intention of this provision of law contained in sub-rule 3 of Rule 6 is that the assessee, who is not able to maintain separate accounts for common inputs / input services used, shall not avail cenvat credit on the inputs / inputs services used in manufacture of exempted goods - In the present case, appellants have informed vide their letter dt. 20.07.2009 that they intend to reverse cenvat credit on monthly basis on the inputs / input services used for production of electricity that is wheeled out to TNEB. As per the Explanation I of the said rule, the said option once exercised would be applicable to all the exempted goods manufactured by the appellant. On such score, the letter given by the appellant would be sufficient intimation to the department that they intend to avail the option stated in sub-rule 3 (ii) of Rule 6 of CCR 2004. Time Limitation - Held that:- The SCN has been issued much later after two years on 22.5.2013 only. When the appellant has reversed the credit and intimated the department, the allegation that the appellant has suppressed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also imposed equal penalty. The amounts already paid by appellants was appropriated. Aggrieved, the appellants had filed appeal before the Tribunal and vide Final Order No.40556/2015 dt. 11.05.2015 the Tribunal had set aside the impugned order allowing the appeal at the time of hearing the stay petition itself. The department approached the Hon ble High Court against this order and vide judgement in C.M.A No.1513 of 2017, dt. 14.08.2018, the Hon ble High Court set aside the Final Order passed by the Tribunal and remanded the matter for fresh consideration. 2. The Hon ble High Court had observed that the reliance placed by the Tribunal in the case of Burn Standard Co. Ltd. Vs CCE Salem 2010 (262) ELT 786 (Tri.-Chennai) was erroneous. The relevant portion of the judgment of the High Court is reproduced as under : 8. Therefore, the decision in the case of Burn Standard Co. Ltd., could not have been applied to the facts of the case on hand and to that extent, the Tribunal committed an error. 9. With regard to the factual aspect as pointed out by the learned Senior Standing Counsel for the Revenue, both before the Tribunal as well as before us, we find that there has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants vide letter dt. 20.07.2009 had informed the department that they have reversed credit in respect of inputs / input services used for electricity and also intends to reverse the credit on monthly basis, it is sufficient intimation to the department with regard to the option exercised by them under clause (ii) of Rule 6 (3) of CCR 2004. Even though they have other exempted products such as metallurgical coke, when the appellants have opted to reverse the credit attributable to electricity as per the Explanation I, the same would apply to all their exempted goods. The department therefore cannot contend that appellant has not exercised the option. He adverted to the SCN as well as para-74 of the impugned order and argued that the only reason for disallowing the appellants to avail the option of reversing the proportionate cenvat credit is that they have not intimated the department with regard to the option exercised by them. The entire credit attributable to exempted goods has been reversed by the appellants by 2011. Thereafter, by issuing a show cause notice dt. 22.05.2013, the department has alleged that appellant has not exercised the option and therefore has to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etallurgical coke. He prayed that the impugned order may be set aside. 4.1 The Ld. A.R Shri K. Veerabhadra Reddy supports the findings in the impugned order. He much emphasized on sub-rule (3) (i) and (ii) of Rule 6 of CCR 2004 and argued that appellant has to pay an amount 5% or 10% of the value of exempted products if they have not exercised the option of reversing the credit attributable to exempted goods. In the present case, it is not disputed by the appellants that they have used common inputs / input services for manufacture of exempted goods, namely, metallurgical coke. Thus, when they have used common inputs for dutiable goods (finished products i.e. steel and rods) as well as for manufacture of exempted goods (metallurgical coke), they have to maintain separate accounts for such common inputs. In case appellant does not maintain separate accounts, they have to follow the law laid down in sub-rule (3) of Rule 6 of CCR 2004. Appellant has not intimated the department with regard to their intention to exercise the option of reversing the credit, paying an amount attributable to the value of exempted products. Therefore, they are liable to pay the amount as stated in sub-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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 service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely :- (i) the manufacturer of goods shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociations seeking clarifications on certain doubts relating to these amendments. Similar references have also been received from filed formations. For the sake of uniformity in practice and removal of doubts, following clarifications are issued in respect of queries received in this regard : Question Answer 2. Whether an assessee availing option (i) in respect of certain exempted goods/services can also avail option (ii) in respect of other exempted goods or services simultaneously? An assessee opting for either of the option is required to avail the said option for all the exempted goods manufactured by him and all the exempted services provided by him and the option once exercised during a financial year (F.Y.) cannot be withdrawn during the remaining part of the FY. Therefore, the same assessee cannot avail both option (i) and option (ii) simultaneously during a financial year. [Explanation I to Rule 6(3)]. 6.3 From the above, it can be seen that when the manufacturer is not maintaining separate accounts for the common inputs used for manufacture of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up to the assessee that which option has to be availed. Revenue could not insist the appellant to avail a particular option. In the present case the appellant have admittedly availed option as provided under Rule 6(3)(ii) and paid an amount as required under sub-rule (3A) of Rule 6. As regard the compliance of the procedure and conditions as laid down for availing option as provided under sub-rule (3)(ii), we find that foremost condition is that the appellant is required to pay an amount as per the formula provided under sub-rule (3A) on monthly basis. However, we find that as per the provision, payment on monthly basis is 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 compliance as provided under Clause (a) of sub-rule (3A) of Rule 6 the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail a particular option. In the present case admittedly it 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. 5.4 We find that the appellant admittedly paid an amount of ₹ 4,06,785/- plus interest, this is not under dispute. Therefore in our view, 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 servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Life Insurance Co. Ltd. Vs CST Mumbai (supra), it was held that Revenue cannot insist the assessee to avail a particular option and that Rule 6 (3) (i) cannot be made automatically applicable on failure by the assessee to intimate in writing about option to be availed the assessee. The relevant paragraph of the decision is reproduced as under : 5.1 We are in agreement with the aforesaid order of the Tribunal and the other judgments and hold that the appellant is entitled for reversal of credit attributable to the exempted service and the demand of 6% is not sustainable against them. The appellant has also argued that there reversal of Cenvat credit ought to be computed by taking the entire Cenvat credit of the services of Insurance Auxiliary Service as the same fall in ambit of Rule 6(5) of Cenvat Credit Rules, 2004 in line with Tribunal s decision in case of TATA AIG Life Insurance Company Ltd. reported in 2014-TIOL-487 = 2015 (37) S.T.R. 570 (Tribunal). We find that in terms of Rule 6(5) of CCR, 2004 the credit of tax paid on Insurance Auxiliary Service cannot be denied if the person availing such credit is engaged in both categories of services i.e. taxable as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
