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2018 (9) TMI 982 - AT - Central ExciseCENVAT Credit - Common inputs used in dutiable as well as exempted goods - non-maintenance of separate record - Rule 6 of the Cenvat credit Rules, 2004 - Held that - The appellant has reversed the proportionate credit as per Rules 6 (3A) (ii) along with interest and informed the Department vide letter dated 25.02.2012 and 24.05.2012, further it is found that once the appellant has reverse the proportionate Cenvat credit availed on common input services attributable to exempted goods then it is not required to pay 10% or 5% as the case may be as demanded by the Revenue. The appellant s case is squarely covered by the decision of Structural Engineers Vs. C.C.E Bangalore-I 2016 (8) TMI 387 - CESTAT BANGALORE , where it was held that In view of subsequent compliance with the provisions of Rule 6(3) (ii) of CCR, with the payment of credit required to be reversed along with interest, there is substantial compliance of the law. The failure if any is only procedural lapse of not filing the declaration of availing option. Appeal allowed - decided in favor of appellant.
Issues:
Violation of Rule 6 of Cenvat Credit Rules, 2004 - Maintaining separate records for input services used in the manufacture of goods chargeable to NIL rate of duty. Analysis: The appeal was filed against the Commissioner (Appeal)'s order rejecting the appellant's appeal. The appellant, engaged in manufacturing various products, was found availing Cenvat credit on common input services without maintaining separate records, violating Rule 6 of the Cenvat Credit Rules, 2004. The Preventive Staff audit revealed this discrepancy for the period 2008-09 to 31.01.2011. A show cause notice was issued, and the original authority confirmed a demand of ?6,86,325 under Section 11A of the Central Excise Act, 1944, along with interest and penalties. The appellant argued that they maintained separate records for inputs used in dutiable and exempted goods, availed Cenvat credit on specific input services, and complied with Rule 6(3)(ii) by filing the requisite intimation. They admitted the procedural lapse of not filing the intimation regarding proportionate reversal for the period 2008-09 to 2011-12 but reversed the Cenvat credit subsequently. The appellant contended that the impugned order lacked legal sustainability as it did not consider the facts and law properly. They argued that once they reversed the proportionate credit as per Rule 6(3A)(ii) with interest and informed the Department, they should not be required to pay the demanded amounts. The appellant cited precedents like the case of Structural Engineers Vs. C.C.E Bangalore-I and Hindustan Antibiotics Ltd. Vs. C.C.E, Pune to support their position. The Ld. AR defended the impugned order, but the Member (Judicial) found that the appellant's actions aligned with the legal requirements. Referring to the Hindustan Antibiotics Ltd. case, the Member concluded that the failure to file the declaration was a procedural lapse, and substantial compliance with the law had been achieved by the appellant. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief. In conclusion, the judgment addressed the issue of maintaining separate records for input services used in manufacturing goods chargeable to NIL rate of duty under Rule 6 of the Cenvat Credit Rules, 2004. The appellant's compliance with the rules, including the reversal of proportionate credit and intimation to the Department, was deemed sufficient, leading to the setting aside of the original demand and penalties imposed. The decision highlighted the importance of procedural compliance and substantial adherence to legal requirements in excise matters.
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