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TMI Blog2024 (12) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... e Crore Forty Four Lakhs Eighty Four Thousand Eight Hundred & Sixty Eight only] on the party under the provisions of Rule 15(2) of the Cenvat Credit Rules, 2004, read with proviso to clause (c) of sub-section (1) of Section 11AC of the Central Excise Act, 1944 in respect of the demand confirmed in para (i) above." 2.1 Appellant is engaged in the manufacture and sale of Portland Pozolana Cement. They are also availing facility of Cenvat credit. 2.2 Appellant have captive power plant for generation of electricity, out of total power generated, some portion is wild out to M/s UPPCL and M/s NPCL. Certain common inputs and input services have been used by the appellant i.e. GTA, Maintenance or repair services, Manpower Supply Services, Security, Rent-a-cab, cargo handling and Consultancy Services and credit received through ISD for generation of Electricity consumed captively for production of PP Cement and for surplus electricity sold to M/s UPCP, Jaypee Chunar Cement Products and Kanpur Fertilizers during the period from April, 2015 to February, 2016. 2.3 Appellant did not follow the procedure as per Rule 6 (3) of the Cenvat Credit Rules and during the special audit of the records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C)] have held as follows:- "19. The question which still remains to be answered is : whether an assessee would be entitled to claim CENVAT credit in cases where it sells electricity outside the factory to the joint ventures, vendors or gives it to the grid for distribution? In the case of Collector of Central Excise v. Rajasthan State Chemical Works reported in 1991 (55) E.L.T. 444 (S.C.) the test laid down by this Court is whether the process and the use are integrally connected. As stated above, electricity generation is more of a process having its own economics. Applying the said test, we hold that when the electricity generation is a captive arrangement and the requirement is for carrying out the manufacturing activity, the electricity generation also forms part of the manufacturing activity and the "input" used in that electricity generation is an "input used in the manufacture" of final product. However, to the extent the excess electricity is cleared to the grid for distribution or to the joint ventures, vendors, and that too for a price (sale) the "process and the use test" fails. In such a case, the nexus between the process and the use gets disconnected. In such a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a price. 21. Before concluding, it may be clarified that on account of repeated amendments in the CENVAT Credit Rules, huge litigation in the country stands generated. In the circumstances, we are of the view that penalty is not leviable on appellant/assessee, particularly when in large number of other cases, on account of conflict of views expressed by various Tribunals/High Court, the assessees have also succeeded. Hence, although M/s. Maruti Suzuki Ltd. (appellant) has failed in their civil appeals the Department will not impose penalty." 4.3 We also note that just for the reason that the appellant have not followed the procedure as led down under Rule 6 (3) of Cenvat Credit Rules. The benefit of proportionate reversal, as per the said rule should not be denied for the reason of not following the prescribed procedure. Mumbai bench has in the case of Mercedes Benz India (P) Ltd. [2015 (40) STR 381 (Tri.-Mum)] held as follows:- "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal has been affirmed by the Hon'ble Supreme Court reported at 2016 (41) STR 577 (SC). 4.4 Tribunal has inconstantly agreed with the said view in series of decisions on this issue. In the case of Tiara Advertising [2019 (30) GSTL 474 (Telangana)] Hon'ble Telangana High Court have held as follows:- "14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. As rightly pointed out by Sri S. Ravi, Learned Senior Counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed Cenvat Credit of Rs. 17,15,489/-. 15. We may also note that in the event the petitioner was found to have avai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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