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TMI Blog2024 (6) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... and steel products, uses several duty-paid input materials and avails various input services and avails and utilizes CENVAT credit of duty or service tax paid thereon in terms of the CENVAT Credit Rules. Since the said duty paid on input materials and input services are used both in or in relation to the manufacture of dutiable and exempted goods respectively, the respondent-assessee is required to follow the provisions of Rule 6 of the CENVAT Credit Rules. 3. At this stage, it is relevant to state that Rule 6(3) of the CENVAT Credit Rules was substituted on March 1, 2008 by Notification No. 10/2008-CE(NT) with effect from April 1, 2008. A new sub-rule (3A) was also inserted in Rule-6 by the said Notification, which was made effective on and from April 1, 2008. In terms of the amended provisions, a manufacturer of goods or provider of output services who did not maintain separate accounts as provided for under Rule 6(2) of the CENVAT Credit Rules was given two options. In terms of Rule 6(3)(i) the manufacturer could make payment of an amount equal to 10% of the value of the exempted goods. However, in terms of Rule 6(3)(ii) of the CENVAT Credit Rules the manufacturer of goods coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner, the impugned order was passed by the Commissioner. Being aggrieved thereby the appeal has been preferred by the respondent-assessee. Thereafter, the learned Tribunal allowed the appeal preferred by the respondent-assessee and hence, the instant appeal has been preferred by the revenue. 5. Mr. P.A.S.Pati, learned counsel appearing for the appellant-revenue submits that learned CESTAT failed to appreciate the fact that as per clause (i) & (ii) of Sub-Rule 3 of Rule 6 of CENVAT Credit Rules, 2004 and the Explanations/conditions imposed therein, the respondent-assessee was required to opt for either of the two provisions as envisaged in the clause (i) & (ii) of Sub-Rule 3 of Rule 6 of CENVAT Credit Rules, 2004 and the same shall not be withdrawn during the same financial year. However, the Respondent-assessee started self-assessment by way of filing their ER-1 Return from April, 2008 to August 2008 by complying with clause (i) of sub-rule 3 of Rule 6 of CCR, 2004 wherein 10% of the value of exempted goods i.e., Coal-Tar and CO gas was reversed. The Respondent-assessee adopted such payments up-to August 2008 which is evident from the ER-1 return submitted by them. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity to follow the option of Rule 6(3)(ii) within the stipulated time. This act of the Assessee clearly indicate that it acted as per their convenience; rather than following the law in true spirit. It appears to be an afterthought on the part of Assessee. 6. Mr. Samir Chakraborty, learned Sr. counsel appearing for the Assessee submits that the amended provision of Rule 6(3) along with Rule 6(3A) of the CENVAT Credit Rules came into effect on and from April 1, 2008. The new 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 Assessee 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 Rules for April 2008. Mr. Chakraborty further submits that there has been compliance by the Assessee with the requirement under Rule 6(3) of the CENVAT Credit Rules, in making reversals of CENVAT credit during the said period in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A). Explanation I. 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 II. For removal of doubt, it is hereby clarified 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." "(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 Superint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercise of option in terms of Rule 6(3)(i) of the CENVAT Credit Rules, a harmonious construction of the relevant provisions of Rule 6(3) and 6(3A) of the CENVAT Credit Rules makes it ample clear that exercise of option in terms of Rule 6(3)(i) has also to be specifically intimated to the jurisdictional Central Excise authority and in the absence thereof; it cannot be construed that a manufacturer has chosen to exercise the option in terms of Rule 6(3)(i) of the CENVAT Credit Rules. The correspondence on record of the Assessee with Range Superintendent exchanged during the period May 2008 to June 2008, clearly establishes that the Assessee had never exercised at any point of time during the period 2008-09 the option in terms of Rule 6(3)(i) of the CENVAT Credit Rules prior to May 2008. 11. We don't have any hesitation in holding that the Commissioner has erred in holding that it is on record that the Assessee had exercised the option under Rule 6(3)(i) of the CENVAT Credit Rules in the instant case. There is no document disclosed either in the show cause notice or in the OIO which evidences exercising of such option by the Assessee. Further, exercising an option is a positive act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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