TMI Blog2020 (7) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... s envisaged the assessee becomes liable to calculate and pay amount equivalent to 5% of the value on exempted services. There is no requirement under Rule 6(3)(i) and Rule 6(3A) of the Cenvat Credit Rules that the option had to be exercised on the first day of the financial year or the first month thereof. On the contrary, the said provisions clearly indicate that such option could be exercised at any point of time during a financial year by a manufacturer. The only restriction under Explanation-I of Rule 6(3) is that once such option is exercised, the same has to be continued with during the remaining part of the financial year. Thus, there has been due compliance by the appellant of the requirements under rule 6(3) and (3A), including the procedure laid down therein and the appellant has legally and validly availed the option in terms of Rule 6(3)(ii). The Commissioner has therefore erred in holding that the appellant had not fulfilled the conditions of procedure laid down in Rule 6(3) and Rule 6(3A) of the Cenvat Credit Rules and that the appellant was not entitled to avail option under Rule 6(3)(ii) of the Cenvat Credit Rules - Even otherwise, the demand confirmed under R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to input and input services used in or in relation to the manufacture of the exempted goods subject to the conditions and procedure specified in Rule 6(3A) of the Cenvat Credit Rules. Explanation-I in the said substituted Rule 6(3) however made it clear that if a manufacturer of goods or provider of output services availed any of the options (i) or (ii) during a financial year, such option has to be exercised for all exempted goods manufactured by him and it cannot be withdrawn during the remaining part of the same financial year. 4. According to the appellant the amended provision of Rule 6(3) along with Rule 6(3A) of the Cenvat Credit Rules coming into effect on and from April 1, 2008, the procedure which had to be followed as laid down in Rule 6(3A) required appreciation and working out before any option could be exercised by it and since this took some time, the appellant, in order that there is no contravention of the provisions of the Cenvat Credit Rules, continued to make payment as before, which was 10% of the value of the exempted goods, coal tar and CO gas (hereinafter referred to as the said goods ) as provided in the erstwhile Rule 6(3)(b) of the Cenvat Credit R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of penalties upon the appellant under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act and Rule 27 of the Central Excise Rules, 2002 respectively. 8. Thereafter, upon the appellant filing its reply to the said show cause notice by a letter dated July 20, 2010 and a personal hearing held by the Commissioner, the impugned order was passed by the Commissioner. Being aggrieved thereby the instant appeal has been preferred by the appellant. 9. We have heard Dr. Samir Chakraborty, Senior Advocate and Mr. D.K. Acharya, Special Counsel on behalf of the appellant and the respondent respectively. 10. It has been contended on behalf of the appellant as follows: (a) There has been compliance by the appellant with the requirement under Rule 6(3) of the Cenvat Credit Rules, in making reversals of cenvat credit during the said period in terms of Rule 6(3)(ii) read with Rule 6(3A) of the Cenvat Credit Rules and findings to the contrary made in the impugned order are erroneous and untenable. (b) The restriction provided under Explanation-I of not being able to withdraw the option during the remaining part of the financial year can arise only when a manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided under Rule 6(3)(ii) of the Cenvat Credit Rules during the said period. This finding has been arrived at incorrectly/by overlooking and/or by ignoring the relevant materials on record, including the circumstances under which the appellant had to make the payments, including the relevant correspondence of the appellant on record prior to October, 2008. (f) The issues involved herein stand settled by the following decisions of the Tribunal in favour of the appellant s contentions: (i) Mercedes Benz India (P) Ltd. Vs. Commissioner of C.Ex., 2015 (40) STR 381 (T) (ii) Aster Pvt. Ltd. Vs. Commissioner of Customs C.Ex., 2016 (43) STR 411 (T) (iii) Tara Technologies Ltd. Vs. CCE, 2016 (42) STR 290 (T) (iv) Ankit Packaging Ltd. Vs. Commissioner of Central Excise, 2004 (165) ELT 228 (T-LB). (g) In any event, Rule 6(3) cannot be made automatically applicable on failure to intimate in writing about option to be availed by an assessee. It is upto the assessee to avail a particular option and Revenue cannot insist on availment of a particular option or make demand under Rule 6(3)(1), no such power being conferred either under the Cenvat Credit Rules or the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service. 12.1 The relevant part of Rule 6(3A) of the Cenvat Credit Rules 2004 read as follows: (3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:- (a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving 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 exercised 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. 13. This issue came up for consideration before a Co-ordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 regards 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 fulfil the condition, assessee should pay the said amount, which has been complied by the appellant. 5.2 As regards 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not insist the appellant to 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. (emphasis added) 13.1 Following this decision, in the case of Aster Pvt. Ltd. Vs. Commissioner of Customs C.Ex. (supra), it has been held by another Bench of the Tribunal as follows: 6. For better appreciation, relevant part of Rule 6(3A) is reproduced as under: Rule 6(3A) : For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:- (a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers Ltd. Vs. CCE, Guntur [2009 (247) E.L.T. 209 (Tri-Bang) = 2011 (22) S.T.R. 484 (Tribunal)], it has been held that the condition in Rule 6(3A) to intimate the department is only a procedural one and that such procedural lapse is condonable and denial of substantive right for such procedural failure is unjustified. Taking into account the facts, evidence and following the precedents cited above, I am of the view that the demand raised is not legal and proper. 14. Both the above decisions are applicable on all fours to the instant case. There is no requirement under Rule 6(3)(i) and Rule 6(3A) of the Cenvat Credit Rules that the option had to be exercised on the first day of the financial year or the first month thereof. On the contrary, the said provisions clearly indicate that such option could be exercised at any point of time during a financial year by a manufacturer. The only restriction under Explanation-I of Rule 6(3) is that once such option is exercised, the same has to be continued with during the remaining part of the financial year. In this respect reference may also be made to the Larger Bench decision of the Tribunal in Ankit Packaging Ltd. Vs. CCE (supra). This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, following the principle laid down in the abovestated orders of the Tribunal it is conclusive that there has been due compliance by the appellant of the requirements under rule 6(3) and (3A), including the procedure laid down therein and the appellant has legally and validly availed the option in terms of Rule 6(3)(ii). The Commissioner has therefore erred in holding that the appellant had not fulfilled the conditions of procedure laid down in Rule 6(3) and Rule 6(3A) of the Cenvat Credit Rules and that the appellant was not entitled to avail option under Rule 6(3)(ii) of the Cenvat Credit Rules. 17. Even otherwise, the demand confirmed under Rule 6(3)(i) of the Cenvat Credit Rules by the Commissioner choosing such option in the show cause notice cannot be sustained, as held in the aforesaid decisions. 17.1 Further, in the case of Tiara Advertising Vs. Union of India (supra), the Hon ble Telengana High Court s Division Bench, dealing with this issue has held as follows: 14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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