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2019 (7) TMI 1401 - AT - Central ExciseCENVAT Credit - common input services used in manufacturing as well as trading activity - non-maintenance of separate records - Rule 6(2) of CENVAT Credit Rules, 2004 - HELD THAT - This issue is no more res integra and has been settled by various decisions of the Tribunal wherein it has been consistently held that the assessee has an option to reverse the credit as per the formula prescribed in Rule 6(3A) and if the assessee has not exercised the option prior to the availment of credit then the same can be exercised subsequently. In the case of M/S. ASTER PVT. LTD. VERSUS CC CE, HYDERABAD 2016 (6) TMI 866 - CESTAT HYDERABAD , this Tribunal again reiterated that Rule 6(3A) is only a procedural which cannot deny the substantive right. In the present case, the appellants are prepared to reverse the proportionate credit which according to them comes to only to ₹ 15,922/- along with interest. Penalty - no suppression of facts - HELD THAT - There was no suppression of fact with intent to evade payment of duty. Further the non-reversal was due to bona fide belief founded by the appellant regarding the eligibility of the credit - the appellant is not liable to penalty. Appeal allowed in part.
Issues:
Appeal against demand confirmation and remand for CENVAT credit verification. Analysis: The appeals were directed against a common impugned order passed by the Commissioner(Appeals) confirming the demand from April 2011 onwards and remanding the matter to verify the CENVAT credit availed by the appellant. The appellant, engaged in manufacturing pre-fabricated buildings and trading consumables, was accused of not maintaining separate accounts for dutiable and exempted activities as required by Rule 6(2) of CENVAT Credit Rules, 2004. The show-cause notice proposed a demand of ?7,89,036/- for the period from 2011-12 to 2014-15. The original authority confirmed this demand along with another demand for ?3,38,280/- for the period from April 2015 to March 2016, along with interest and penalty. The appellant contended that the impugned order did not appreciate the facts and law properly and denied the option to reverse the credit as per Rule 6(3A). The appellant cited various tribunal decisions to support their argument that the failure to intimate the department about the credit reversal option under Rule 6(3A) is a procedural lapse and does not justify denial of substantive right. The appellant calculated the total credit to be reversed as ?15,922/- for the period in question and argued against the invocation of the extended period due to lack of suppression of facts to evade duty payment. The learned AR defended the impugned order, but after considering both sides' submissions and perusing the records, the Judicial Member found that the issue was settled by various tribunal decisions. The Judicial Member referred to the case law where it was held that the appellant has the option to reverse the credit as per the formula in Rule 6(3A) and that failure to intimate the department about this option does not preclude subsequent exercise of the same. The Judicial Member emphasized that Rule 6(3A) is procedural and not mandatory, and that the demand raised by the Revenue was not legal and proper. The Judicial Member also noted that the demand was hit by limitation as the appellant had already reversed the pro rata credit with interest before the show-cause notice was issued, and there was no suppression of facts as the appellant had disclosed the relevant information in their returns. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The Judicial Member also held that the appellant was not liable for penalty and directed the appellant to reverse the proportionate credit under Rule 6(3A) along with interest, to be verified by the original authority. The appeal was disposed of accordingly.
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