9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 1081 - AT - Central ExciseRecovery of CENVAT Credit along with interest and penalty - applicability of scheme of neutralisation - trading activity - input service used in common to the extent attributable to ineligible activity - rule 6(3) of CENVAT Credit Rules, 2004. HELD THAT - The scheme of neutralisation is to be exercised only by the assessee. Furthermore, it is also abundantly clear that rule 6 of CENVAT Credit Rules, 2004 merely sets out the scheme of neutralisation and entirely for the assessee to comply with; any failure thereto was to be set right under the authority of rule 14 of CENVAT Credit Rules, 2004. In re Mercedes Benz India (P) Ltd, 2015 (8) TMI 24 - CESTAT MUMBAI it was held that We also note that trading of goods was considered as exempted service from 2011 only, thus it was initial period. We are also of the view that there is no condition provided in the rule that if a particular option, out of three options are not opted, then only option of payment of 5% provided under Rule 6(3)(i) shall be compulsorily made applicable, therefore we are of the view that Revenue could not insist the appellant to avail a particular option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6(3)(ii). Thus, it is clear that exercise of option vests entirely with assessee at any stage and proceedings under rule 14 of CENVAT Credit Rules, 2004 would have to be restricted to that which is least detrimental to the assessee. The demand based on the harshest of the options as ordered by the original authority does not sustain. However, in having taken that extreme step, the claim of the appellant that obligation contemplated in the scheme has been duly complied with was not ascertained. The discharge of the obligation must be in consonance with the computation envisaged in rule 6 of CENVAT Credit Rules, 2004. The matter remanded back to the original authority who shall limit proceedings under rule 14 and rule 15 of CENVAT Credit Rules, 2004, if any, only to deficit, if any, in compliance as set out - impugned order set aside.
Issues Involved:
1. Recovery of Rs. 11,56,09,971 under Rule 14 of CENVAT Credit Rules, 2004. 2. Imposition of penalty under Rule 15 of CENVAT Credit Rules, 2004. 3. Appropriation of Rs. 95,77,184 already remitted by the appellant. 4. Neutralisation of ineligible credit under Rule 6 of CENVAT Credit Rules, 2004. 5. Extent of mandate available for the authority competent to order recovery under Section 11A of the Central Excise Act, 1944. Summary: 1. Recovery of Rs. 11,56,09,971 under Rule 14 of CENVAT Credit Rules, 2004: The appellant disputed the recovery of Rs. 11,56,09,971, including interest and penalty, under Rule 14 of CENVAT Credit Rules, 2004. The appellant had reversed credit of Rs. 95,77,184 in two tranches on 31st May 2012 and 1st June 2012, which was obligated under Rule 6 of CENVAT Credit Rules, 2004, for the ineligible activity for 2011-12. However, the adjudicating authority applied the 'default option' due to the late reversal. 2. Imposition of penalty under Rule 15 of CENVAT Credit Rules, 2004: The penalty imposed was equivalent to the amount recovered under Rule 14. The appellant argued that fulfilling the obligation to neutralize ineligible credit, even belatedly, along with interest, relieved them of higher detriment entailed to other options in Rule 6(3). 3. Appropriation of Rs. 95,77,184 already remitted by the appellant: The appellant had already remitted Rs. 95,77,184 before the issue of the show cause notice. The show cause notice also proposed appropriation of Rs. 1,08,83,928 (inclusive of interest and penalty) paid by the appellant by resorting to the computation prescribed in Rule 6(3A) of CENVAT Credit Rules, 2004. 4. Neutralisation of ineligible credit under Rule 6 of CENVAT Credit Rules, 2004: The appellant's trading activity contributed to their topline for the disputed period, disentitling them from offsetting credit of tax paid on 'input service' used in common. The appellant argued that the machinery provision for disaggregation of credit did not require exercise of option at the beginning of the year and that the self-contained scheme for neutralization under Rule 6(3A) did not envisage any timelines. The Tribunal in Mercedes Benz India (P) Ltd v. Commissioner of Central Excise, Pune-I held that the appellant could opt for the option provided under Rule 6(3)(ii) and pay an amount as required under sub-rule (3A) of Rule 6. 5. Extent of mandate available for the authority competent to order recovery under Section 11A of the Central Excise Act, 1944: The Tribunal held that the scheme of neutralisation is to be exercised only by the assessee and that Rule 6 merely sets out the scheme for the assessee to comply with. Any failure thereto was to be set right under the authority of Rule 14. The Tribunal also noted that the exercise of option vests entirely with the assessee at any stage, and proceedings under Rule 14 would have to be restricted to that which is least detrimental to the assessee. Conclusion: The Tribunal set aside the impugned order and remanded the matter back to the original authority to ascertain the compliance with the computation envisaged in Rule 6 of CENVAT Credit Rules, 2004. The original authority was directed to limit proceedings under Rule 14 and Rule 15, if any, only to the deficit in compliance.
|
