TMI Blog2024 (4) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... e option by submitting intimation letters under Rule 6(3A) dated 24.05.2011 and 02.05.2012, but the Department has not considered the option exercised by the appellant simply on the ground that the option cannot be operative retrospectively from 01.04.2011 and 01.04.2012 respectively. The impugned order is not sustainable - Appeal allowed. - SHRI S. S. GARG, MEMBER (JUDICIAL) AND SHRI VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Present for the Appellant: Shri S. Jayanth, Consultant Present for the Respondent: Shri Harendra Singh Pal (Asst. Commr.), AR ORDER These two appeals are directed against a common impugned order dated 04.08.2014 passed by the Commissioner (Appeals), whereby the learned Commissioner has disposed of two show cause notices issued to the appellant on 16.03.2012 and 31.10.2012 respectively confirming the demand of Rs.40,84,669/- and Rs.35,50,651/- under Rule 14 of the Cenvat Credit Rules, 2004 (hereinafter as the CCR, 2004 ) read with Section 73(1) of the Finance Act, 1994 along with interest and penalty under Rule 15(1) of the CCR read with Section 76 of the Finance Act, 1994. 2.1 Briefly stated facts of the case are that the appellant is engaged in manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision. 4.1 The learned Consultant for the appellant submits that the impugned order is not sustainable in law and is liable to be set aside, as the same has been passed without properly appreciating the facts and the law; and binding judicial precedents on the identical issue. 4.2 He further submits that the appellant had reversed the credit attributed to exempted services and this fact is not being disputed by the Department. The demand has been raised only on the ground that the option to be exercised by the appellant for proportionate reversal under Rule 6(3A) cannot be exercised retrospectively from 01.04.2011 and 01.04.2012. He further submits that this is only a procedural lapse and substantial benefits cannot be denied and therefore, the appellant cannot be put these terms by demanding entire amount under Rule 6(3)(i) of the CCR, 2004. 4.3 He further submits that in the case of first show cause notice, option under Rule 6(3A) was exercised vide letter dated 24.05.2011 for the year 2011-12 and in the case of second show cause notice, option under Rule 6(3A) was exercised vide letter 02.05.2012 for the year 2012-13, but the Revenue did not accept the option availed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit proportionate as per Rule 6(3A) read with Rule 6(3)(ii) of the CCR, 2004 for the entire period i.e. 2011-12 and 2012-13, which is not in dispute. The only issue in the present case is whether the option exercised by the appellant by intimating to the Department under Rule 6(3A) dated 24.05.2011 and 02.05.2012 is legal and valid. Here, it is pertinent to reproduce the provisions of Rule 6 of the CCR, 2004, which is reproduced herein below: RULE 6. [Obligation of a manufacturer or producer of final products and a [provider of output service]]. [(1) The CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services and the credit not allowed shall be calculated and paid by the manufacturer or the provider of output service, in terms of the provisions of sub-rule (2) or sub-rule (3), as the case may be : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any duty of excise is paid on the exempted goods, the same shall be reduced from the amount payable under clause (i) : Provided further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be seven per cent. of the value so exempted: Provided also that in case of transportation of goods or passengers by rail, the amount required to be paid under clause (i) shall be an amount equal to two per cent. of value of the exempted services. Explanation 1. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation 2. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. Explanation 3. - For the purposes of this sub-rule and sub-rule (3A),- (a) ―non-ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit, denoted as B, and shall not be required to be paid; (iii) credit left after attribution of credit under sub-clauses (i) and (ii) shall be called common credit, denoted as C and calculated as,- C = T - (A + B); Explanation. - Where the entire credit has been attributed under sub-clauses (i) and (ii), namely ineligible credit or eligible credit, there shall be left no common credit for further attribution. (iv) the amount of common credit attributable towards exempted goods removed or for provision of exempted services shall be called ineligible common credit, denoted as D and calculated as follows and shall be paid, - D = (E/F) x C; where E is the sum total of (a) value of exempted services provided; and (b) value of exempted goods removed, during the preceding financial year; where F is the sum total of - (a) value of non-exempted services provided, (b) value of exempted services provided, (c) value of non-exempted goods removed, and (d) value of exempted goods removed, during the preceding financial year : Provided that where no final products were manufactured or no output service was provided in the preceding financial year, the CENVAT credit attributable to ineligible comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I is sum total of - (a) value of non-exempted services provided, (b) value of exempted services provided, (c) value of non-exempted goods removed; and (d) value of exempted goods removed; during the financial year; (d) the manufacturer or the provider of output service shall pay on or before the 30th June of the succeeding financial year, an amount equal to difference between the total of the amount of Annual ineligible credit and Annual ineligible common credit and the aggregate amount of ineligible credit and ineligible common credit for the period of whole year, namely, [{A(Annual) + D(Annual)} {(A+D) aggregated for the whole year)}], where the former of the two amounts is greater than the later; (e) where the amount under clause (d) is not paid by the 30th June of the succeeding financial year, the manufacturer of goods or the provider of output service, shall, in addition to the amount of credit so paid under clause (d), be liable to pay on such amount an interest at the rate of fifteen per cent. per annum, from the 30th June of the succeeding financial year till the date of payment of such amount; (f) the manufacturer or the provider of output service, shall at the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 appellant has availed Cenvat credit in respect of common input services, which has been used in relation to the manufacture of the final product as well as for trading of bought out cars. Therefore they are supposed to pay an amount equivalent to Cenvat credit which is attributed to the input service used for exempted service i.e. sale of car. In our view, three options have been provided under Rule 6(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 a procedural lapse. We also note that trading of goods was considered as exempted service from 2011 only, thus it was initial period. We are also of the view that there is no condition provided in the rule that if a particular option, out of three options are not opted, then only option of payment of 5% provided under Rule 6(3)(i) shall be compulsorily made applicable, therefore we are of the view that Revenue could 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he demand can be sustained even when the appellant has not complied with the requirement of intimating the Department about availing the option under Rule 6(3A) of the CCR, 2004. In all the decisions, the appellant has reversed the credit attributable to the exempted services and it has been held by the Tribunal consistently that the said requirement is only a procedural requirement and the demand cannot be confirmed for such procedural lapse. 9. We further find that in the present case, the appellant is on a better footing because he has exercised the option by submitting intimation letters under Rule 6(3A) dated 24.05.2011 and 02.05.2012, but the Department has not considered the option exercised by the appellant simply on the ground that the option cannot be operative retrospectively from 01.04.2011 and 01.04.2012 respectively. 10. Since, the issue is no more res integra as held by the various benches of the Tribunal in the cases cited supra, therefore, by following the ratios of the said decisions cited supra, we are of the considered opinion that the impugned order is not sustainable in law and therefore, we set aside the same by allowing both the appeals of the appellant with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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