TMI Blog2021 (11) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that in case the assessee has not chosen to maintain separate accounts, the Credit Rules do not authorize the departmental authorities to choose one of the options on behalf of the assessee so as to demand the amount of 5% or 10% as per Rule 6(3) of the Credit Rules. The demand of the duty amount calculated @ 5% or 10% of the exempted value cannot be made even though the assessee has not followed the prescribed procedures - there is no legal provision under which an amount equal to 5% or 10% of the value of the exempted goods can be recovered. The reason is that payment of an amount of 5% or 10% is one of the choices under Rule 6 and is not a mandatory payment. This choice cannot be foisted upon the appellant nor can such an amount be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Texmaco Limited stands transferred in the name of Texmaco Rail Engineering Limited (assessee) accordingly. 3. The assessee is engaged in the manufacture of excisable goods which are dutiable as well as exempted from payment of central excise duty during the aforesaid period in dispute. The assessee has also availed the benefit of CENVAT credit in terms of the provisions of the CENVAT Credit Rules, 2004 (the Credit Rules). The dispute in the present case only pertains to availment of credit without maintenance of separate records for manufacture of dutiable as well as exempted goods. 4. It is the case of the Department that since the assessee has not opted for claiming credit on proportionate basis by filing the required declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 2010 and therefore, the benefit of reversal of proportionate credit should not be allowed and (ii) dispute with regard to quantification of demand. 7. For the remaining period April 2008 to February 2011, the Ld. Commissioner has confirmed the demand as proposed in the impugned SCN of the amount calculated @ 5% or 10%, as the case may be, of the value of exempted goods since the required declaration has not been made by the assessee although the assessee has subsequently reversed the proportionate credit on the basis of their own calculation. 8. The Ld. Chartered Accountant for the assessee has relied on the plethora of decisions of the Tribunal to buttress his arguments that when the assessee has reversed the credit amount perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Credit Rules. He accordingly requested that the appeal of the assessee be rejected being devoid of any merit. 11. We find that the issue has been settled by the Hon ble Telangana High Court in favour of the assessee in the case of Tiara Advertising wherein it has been held that in case the assessee has not chosen to maintain separate accounts, the Credit Rules do not authorize the departmental authorities to choose one of the options on behalf of the assessee so as to demand the amount of 5% or 10% as per Rule 6(3) of the Credit Rules. In that event, the authorities can utmost disallow the credit, if at all, wrongly availed or utilised by invoking the provisions of Rule 14 of the Credit Rules. The relevant portion of the decision is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded on these lines, therefore cannot be countenanced. 12. Applying the ratio of the above decisions, we are of the view that the demand of the duty amount calculated @ 5% or 10% of the exempted value cannot be made even though the assessee has not followed the prescribed procedures. We also find that Rule 14 of the CENVAT Credit Rules, 2004 under which the demand was proposed in the Show Cause Notice reads as follows :- Rule 14 : Recovery of CENVAT Credit wrongly taken as erroneously refunded. where the CENVAT Credit has been taken or utilized wrongly or has been erroneously refunded, the same alongwith interest shall be recovered from the manufacturer or the provider of the output service and the provisions of Sections 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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