TMI Blog2023 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... R [ 1995 (12) TMI 72 - SUPREME COURT] has held that once the Cenvat credit availed by the assessee has been reversed, it can be held that assessee has not taken credit of the duty on inputs utilized in exempted final products. The impugned order-in-original is without any merit and hence the same is set-aside. The appeal is allowed. - HON BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) And HON BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) Shri PV Sheth, Advocate for the Appellant Shri Rajesh K Agarwal, Superintendent (AR) for the Respondent ORDER C. L. MAHAR : The brief facts of the matter are that the appellant are engaged in the manufacture of branded and unbranded fire bricks falling under Central Excise Tariff heading 69029010 and 69029020 of the first schedule of Central Excise Tariff Act, 1985. The appellant have been availing benefit of value based exemption under Notification No. 08/2003-CE dated 01.03.2002, as amended. The appellant have also been availing Cenvat credit under Cenvat Credit Rules, 2002 for the relevant period of the demand. 2. The Revenue entertained a view that since the appellant has been clearing their finished goods under the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice and has claimed that more than proportionate credit has already been reversed back by the appellant and they have also paid the interest on the same. 4. Learned Advocate has relied upon various judgments in this regard which are given below:- (a) Tamilnadu News Print and Papers Limited - 2009 (241) ELT 82 (b) Savita Polymers Limited - 2009 (240) ELT 616 (c) Ballarpur Industries Limited - 2006 (199) ELT 433 (d) ESAB India Ltd. 2009 (243) ELT 429 (e) Maize Products 2009 (234) ELT 431 (f) Nicholas Piramal (I) Limited - 2008 (232) ELT 37 (g) Chandrapur Magnet Wires Pvt Limited - 1996 (81) ELT 3 (h) Nestle India Limited -2010 (250) ELT 341 (i) Bombay Minerals Limited - 2019 (29) G.S.T.L. 361 (j) Goyal Proteins Limited - 2017 (355) ELT 72 confirmed by SC 2017(355) ELT A27 (k) Foods, Fats Fertilizers Limited - 2009 (247) ELT 209 (l) Uniworth Textiles Limited - 2013 (288) E.L.T. 161 (S.C.) (m) Polycab Wires Pvt. Limited -2018 (360) ELT 391 (Bom.) (n) Sterlite Telelink Limited - 2014 (312) ELT 353 (Tri. - Ahmd.) 5. We have also heard the learned DR who has reiterated the findings given in the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of C. Excise, Nagpur 1996 (81) ELT 3 (SC) (supra) has held that once the Cenvat credit availed by the assessee has been reversed, it can be held that assessee has not taken credit of the duty on inputs utilized in exempted final products. 7. We also take note of the decisions of this Tribunal in the following case laws:- (a) In the case of Welspun Corp. Limited vs. CCE, Kutch 2019 (368) ELT 179 (Tri. Ahmd.) wherein the Tribunal has passed the following 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-Ash and non-excisable goods i.e. el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit 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) E.L.T. 86 (T) held in para 5 that : 5. The Hon ble Supreme Court in the case of Chandrapur Magnet Wires (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 separate accounts for inputs/input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributable to manufacture of exempted final products is only Rs. 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 Rs. 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 manufacture of exempted final products on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing 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) E.L.T. 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 exercised. In the present case, admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the availment of credit and manufacture and clearance of exempted and non-excisable goods are very much on record, therefore, the suppression of fact cannot be attributed on the part of the appellant. We also find 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 mala fide 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. 8. As per our above discussion, we hold that proportionate credit paid by the appellant along with interest is sufficient compliance under Rule 6(3), accordingly the same is maintained. The demand under Rule 6(3)(i) i.e. 5%/10% of value of the exempted goods and all the penalties are set aside. The appeal is allowed in the above terms. (b) In the case of Mercedes Benz India (P) Limited vs. CCE, Pune 2015 (40) STR 381, the Mumbai Bench of this Tribunal has passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed (i) in or in relation to the manufacture of exempted goods; (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services - (i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance upto the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b). (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 [any one] of the following options, as applicable to him, namely :- (i) pay an amount equal to five percent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Rule 6(3) prevalent at the relevant time, two options have been provided :- (i) Payment of 5% on value of exempted services. (ii) Payment of an amount equal to the Cenvat Credit amount attributed to input services used in or in relation to manufacture of exempted goods or provision of exempted services as provided under sub rule (3A)(b). It is observed that the appellant has availed the option provided under sub-rule (3)(ii) of Rule 6 and paid an amount as per sub-rule (3A) along with interest and intimated the same to the jurisdictional superintendent in writing vide letter dated 14-3-2012. From the perusal of the said letter, we observed that the appellant categorically stated in the said letter that payment of Cenvat Credit, which they have made alongwith interest is in accordance with Rule 6 (3A) of Cenvat Credit Rules. With this act of the appellant, it is clear that the appellant opted for the option as provided under Rule 6(3)(ii) of the Cenvat Credit Rules, 2004, in accordance to which, the appellant are supposed to an amount equivalent to Cenvat Credit on input service attributed to the exempted service in terms of Rue 6(3A). In the present case, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Jurisdictional Superintendent. The appellant has been filing their returns regularly on monthly basis to the department. On perusal of the copies of the such return submitted along with appeal papers, it is observed that the particulars, as required under clause (a) of sub-rule (3A) of Rule 6 has been produced to the range superintendent. Therefore all the particulars which are required to be intimated to the Jurisdictional superintendent while exercising option stand produced. Though these particulars have not been submitted specifically under a particular letter, but since these particulars otherwise by way of return and some of the information under their letters has admittedly been submitted, we are of the view, as regard this compliance of Rule 6(3A), it stood made. 5.3 As regard the contention of the adjudicating authority that this option should be given in beginning and before exercising such option, we are of the view that though there is no such time limit provided for exercising such option in the rules but it is a common sense that intention of any option should be expressed before exercising the option, however the delay can be taken as procedural lapse. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussed above and in the facts of the case that actual Cenvat credit attributed to the exempted services used towards sale of the bought out cars in terms of Rule 6(3A) comes to Rs. 4,06,785/- where as adjudicating authority demanded an amount of Rs. 24,71,93,529/-. In our view, any amount, over and above Rs. 4,06,785/- is not the part of the Cenvat Credit, which required to be reversed. The legislator has not enacted any provision by which Cenvat credit, which is other than the credit attributed to input services used in exempted goods or services; can be recovered from the assessee. 5.6 We have gone through judgments relied upon by the Ld. A.R. In the arguments, we found that as regards the judgments on the issue of availment of Cenvat credit on the input or input services used in dutiable and exempted goods, the provision involved in the present case i.e. Rule 6(3) (i) (ii) (3A) has not been considered in the relied upon judgments, therefore the same are not applicable. As regard the other judgments, all these judgments having different facts and dealing with other provisions such as SSI exemption, exemption notification, etc., which are not identical to the fact of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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