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TMI Blog2024 (5) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of rule 6(3) of CENVAT Credit Rules, 2004, under rule 14 of CENVAT Credit Rules, 2004, along with interest thereon under section 11AA of Central Excise Act, 1944, and imposing penalty of like amount under rule 15 of CENVAT Credit Rules, 2004 is the chargeability of the reversal at notified rate on the total value of exempted goods cleared between February 2007 and March 2011 under rule 6(3) of CENVAT Credit Rules, 2004. 2. The appellant is a manufacturer of steel products and captively consumes 'oxygen', 'nitrogen' and 'hydrogen' of which 'medical grade oxygen' was cleared from the factory without payment of duty during the disputed period. The appellant reversed Rs. 33,22,896/-, along with interest of Rs. 14,06,353/-, in February 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment of rule 6 of CENVAT Credit Rules, 2004 by Finance Act, 2010 as the request has been made only on 21st February 2011 which was beyond the period available for exercise of option. In re Mercedes Benz India (P) Ltd pertaining to disputed credit to be reversed between April 2011 to February 2012, and intimated reversal in March 2012, the Tribunal had held that '5.1 We have observed that in 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 as required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifically 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 A s 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 expressed before exercising the option, however the delay can be taken as procedural lapse. We also note that trading of goods was considered as exempted service from 2011 only, thus it was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. It is also observed that in either of the three options given in sub rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% will automatically be applied. Therefore we do not understand that when the appellant have categorically by way of their intimation opted for option provided under sub-rule (3)(ii), how Revenue can insist that option (3)(i) under Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lapse is condonable and denial of substantive right on such procedural failure is unjustified. Therefore, keeping in view the facts and evidence on record, the demand raised by the Revenue is not legal and proper. Moreover, the demand raised by the Revenue is also hit by limitation as the appellant reversed the pro rata credit with interest on 31-7-2010 itself and communicated to the Department whereas the show cause notice was issued only on 13-3-2012 which is beyond the period of one year and the allegation of the Department regarding suppression of fact is also not tenable because the appellant has disclosed these facts in their periodical ER1 returns filed by them. Therefore, the impugned order is not sustainable on merit as well as on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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