2023 (3) TMI 63 - AT - Central Excise

CENVAT Credit - traded goods - exempt goods or not - cenvat credit was availed on the common input service attributed to the dutiable goods as well as exempted service (trading activity) - appellant was admittedly reversing the proportionate credit attributed to the trading activity along with interest - applicability of Rule 6(3) of CCR - HELD THAT - The facts of the present case is that though initially the appellant have taken the cenvat credit on the common input service which were used for manufacture of dutiable goods as well in relation to exempted service i.e. trading activity however on pointing out by the department the appellant have calculated the proportionate credit in respect of common input service attributed to the trading activity and paid the same along with interest. After payment of such proportionate credit the situation became as if no cenvat credit was taken in respect of common input service attributed to the trading activity as held by the Hon ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE NAGPUR 1995 (12) TMI 72 - SUPREME COURT . In Rule 6(3) from the different options provided to the assessee in addition to 6/7% payment an option for proportionate reversal of the credit is also provided. This tribunal time and again taken a view that whether option is availed in advance or later stage it is prerogative to the assesse to choose any one of the option - Therefore merely because the appellant at the relevant time did not opt for any of the option revenue cannot impose upon the appellant a particular option i.e. payment of 6/7% of the value of the goods/service. Therefore once it is admitted fact that the appellant have reversed the cenvat credit in respect of common inpout service attributed to the trading activity and also paid the interest thereon at the relevant time no demand of 6/7% of the value of the trading activity will sustain - Appeal allowed.

Summary

Issues:
Whether the appellant is liable to pay 6/7% of the value of traded goods as exempted goods when cenvat credit was availed on common input service attributed to both dutiable goods and exempted service, specifically trading activity.

Analysis:
The appellant, in this case, had initially availed cenvat credit on common input service used for dutiable goods and exempted trading activity. The department demanded 6/7% due to the appellant not opting for any option at any stage. However, the appellant reversed the cenvat credit for the trading activity and paid interest, invoking Rule 6(3) options. The appellant argued that due to the reversal and interest payment, the 6/7% demand was not applicable, citing various judgments like TIARA ADVERTISING VS. UNION OF INDIA and others.

The Assistant Commissioner for revenue reiterated the impugned order findings, leading to a detailed consideration by the Member (Judicial). The appellant's reversal of cenvat credit for the trading activity, as per the proportionate credit calculation and interest payment, aligned with the Supreme Court's ruling in CHANDRAPUR MAGNET WIRES case. The Tribunal emphasized that the choice of options under Rule 6(3) is the assessee's prerogative, regardless of when the option is exercised. Therefore, the revenue cannot enforce a specific option, like the 6/7% payment, if the appellant had already reversed the credit and paid interest, as supported by various cited judgments.

Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, signifying that no demand for 6/7% of the trading activity's value would be sustained. The judgment was pronounced in open court on 01.03.2023.