2016 (3) TMI 1143 - AT - Central Excise

Refund - Rule 6(3)(ii) of the CCR 2004 - Held that - I find that it was appellant who opted to pay proportionate Cenvat credit on their own. In Rule 6(3) two options are available i.e (1) payment of 5%/10% of the value of exempted goods and (2) proportionate Cenvat credit attributed to the inputs consumed in the exempted goods. Explanation (1) to Rule 6(3) is very clear which provides that in a financial year once any particular option is availed the same cannot be withdrawn that means when the asssesse has availed option for payment of proportionate credit as provided under Rule they are not allowed to change the option and claim that they want to pay 5%/10% of value of the exempted goods therefore the refund of differential duty is not admissible - Appeal dismissed.

Summary

Issues:
- Appeal against rejection of refund claim under Rule 11B based on reversal of Cenvat credit under Rule 6(3)(ii) of CCR, 2004.
- Interpretation of Rule 6(3) options for availing Cenvat credit reversal or payment of 5%/10% of exempted goods' value.
- Claim for refund due to alleged excess payment after opting for proportionate credit reversal.
- Application of Explanation 1 to Rule 6(3) prohibiting withdrawal of chosen option during a financial year.
- Comparison of present case with Gamma Rays Transmission Ltd judgment on SSI exemption.

Analysis:
The appeal challenged the rejection of a refund claim amounting to Rs. 17,29,019 under Rule 11B, based on the appellant's reversal of Cenvat credit under Rule 6(3)(ii) of the CCR, 2004. The appellant, engaged in manufacturing organic chemicals, opted to reverse proportionate Cenvat credit due to exempt products, claiming an excess payment due to not choosing the option of paying 5%/10% of the exempted goods' value under Rule 6(3)(i). The Commissioner(Appeals) upheld the rejection, emphasizing the appellant's initial choice to reverse credit on their own. The appellant argued for a refund citing the option under Rule 6(3)(i) and reliance on a precedent. However, the Revenue contended that once an option is chosen in a financial year, it cannot be altered as per Explanation 1 to Rule 6(3).

The Tribunal noted the appellant's voluntary decision to reverse Cenvat credit and the clear provision in Rule 6(3) that once an option is chosen, it cannot be changed during the financial year. The Commissioner(Appeals)'s findings reiterated this, stating that the appellant's reversal was in accordance with the law, and the option chosen stands for the entire financial year. The Tribunal upheld the original decision, rejecting the appeal and emphasizing the inapplicability of the precedent cited by the appellant, which pertained to a different context of SSI exemption. The judgment highlighted the distinct nature of the current case regarding Cenvat credit reversal under Rule 6(3) of the Cenvat Credit Rules, 2004. The appeal was dismissed, affirming the original adjudicating authority's order and underscoring the non-withdrawable nature of the chosen option during the financial year as per Explanation 1 to Rule 6(3).