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TMI Blog2015 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... quired under sub rule (3A) of Rule 6. - as per the provision, payment on monthly basis is provisional basis, therefore it is not mandatory that whole amount or part of the amount as required to be paid on every month. The appellant though belatedly calculated the amount required to be paid in terms provided under Rule (3A) of Rule 6, therefore to fulfil the condition, assessee should pay the said amount, which has been complied by the appellant. Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used in the exempted goods. It is also observed that in either of the three options given in sub rule (3) of Rule 6, there is no provisions that if the assessee does not opt any of the option at a particular time, then option of payment of 5% will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty imposed under Section 11AC ibid, within thirty days of the date of communication of this order. 2. The fact of the case is that appellant, M/s. Mercedes Benz India (P) Ltd. are engaged in the manufacture of motor vehicle i.e. passenger cars falling under Chapter 87 of the Central Excise Tariff Act, 1985. They are also engaged in the trading activity of similar goods alongwith their motor vehicle in the same premises. In case of trading activity, the appellant imports cars directly from Daimler Chrysler, Germany. 2.1 In terms of the order received from their dealer network and sell the same to different customers. The appellant maintains common balance sheet for their manufacturing as well as trading activity. The appellant availed Cenvat credit under Cenvat Credit Rules, 2004 on input and input services used in relation to the manufacture of finished goods. The appellant vide their letter dated 28/3/2012 intimated that in the year 2011-12 (April 2011 to Feb 2012), value of the clearances by their manufacture unit was ₹ 1218 ,48,41,983 /- and value of clearances on account of trading was ₹ 494,38,70,577/-. It was observed that during the said period the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 13/4/2012 proposed demand of ₹ 24,71,93,529/- which is equivalent to 5% of the value of traded goods i.e. ₹ 494,38,70,577/- on exempted services i.e. trading activity of the motor vehicle. It was also proposed to adjust an amount of 4 ,06,785 /- already paid by the appellant. In addition interest under Section 11AA was proposed to be imposed and amount of ₹ 20 ,993 /- was proposed to be adjusted against the demand of interest. Penalty under Rule 15(2) of CCR Rule, 2004 with read Section 11AC was also proposed to be imposed. Show cause notice was adjudicated by Ld. Commissioner wherein all the charges proposed in the show cause notice have been confirmed vide the impugned order dated 16/11/2012 therefore the appellant is before us. 3. Shri V. Shridharan, Ld. Sr. Counsel for the appellant made following submissions: (a) There is no dispute that while availing Cenvat credit appellant have availed Cenvat credit strictly as per the provisions made in the Cenvat Credit rules inasmuch as services which are input services as defined under 2(l) of the CCR, Rules. The show cause notice also not raised dispute on the correct availment of Cenvat Credit. In the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(ii). As per sub rule (3A) the assessee is required to intimate while exercising the option provided under Rule 6(3)(ii) to the Jurisdictional superintendent and the intimation should contain the prescribed particulars specified under clause (a) of sub rule (3A) of Rule 6 of CCR, 2004. The clause (a) nowhere specified that the manufacturer or provider of out put service shall exercise such option at the beginning of the financial year for which option to be exercised. The provisions does not debar a manufacturer or provider of output service from exercising option in the middle of the year. In fact Rule 6 (3A)(a)(ii) states that manufacturer ought to mention date from which the option under this clause is exercised or proposed to be exercised. Thus Rule itself contemplates a situation where the declaration is filed by the manufacturer after they have exercised option. Therefore contention of the Ld. Commissioner that option to make payment under Rule 6(3)(iii) required to be exercised by the appellant in the beginning of the financial year is incorrect and without any legal basis. Rule 6 (3A)(b)(iii) merely provided for provisional amount of Cenvat credit to be reversed on monthly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own. It is the submission of the Ld. Counsel that is not provided under the law that if there is any procedure infraction in availing the option of Rule 6(3)(ii), the option provided under Rule 6(3)(i) shall automatically apply. Two options have been provided under the law to the assessee. It is a choice of the assessee which option to be availed. In the present case, the appellant admittedly availed optioin available under rule 6(3)(ii) read with rule 6(3A), therefore Revenue cannot insist to avail the option of Rule 6(3)(i) and demand huge amount of money which is otherwise not payable by the appellant, nor it is part of Cenvat Credit availed by the Appellant. He submits that when the options have been provided, the department has no say for choice of the assessee, the assessee who has liberty to choose any of the option and therefore in the appellant case, the appellant has opted for option available under rule 6(3)(ii) of Cenvat Credit Rules, therefore department has no role to decide regarding any other option available in these rules. He also refers the adjudication order passed by the same Jurisdictional Commissioner vide Order-in-Original No. P-I/COMMR/ST/09/2011 dated 28/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had no option except to follow the provision of Rule 6(3)(i) and accordingly they were required to pay 5% of the value of the exempted services (trading of cars). 4.2 Ld. A.R. in support of his submission that procedure must be scrupulously followed, else benefit provided under law, the benefit cannot be extended. He placed reliance on following judgments: (a) Commissioner of C.Ex. Ahmedabad Vs . Ramesh Food Products [2004 (174) E.L.T. 310 (S.C.)] (b) Kamani Foods Vs . Collector of Central Excise, Patna [1995 (75) E.L.T. 202 (Tri) ] (c) Eagle Flask Industries Limited Vs . Commissioner of C.Ex. Pune [2004 (171) ELT 296 (S.C.)] (d) Golden Dew Tra Factory Vs . Commissioner of C.Ex. Coimbatore [2009 (15) S.T.R. 358 (Tri. Chennai)] (e) Kaikatty Indus. Co-op. Tea Factory Ltd. Vs.Commr. of C.Ex. Salem [2010 (261) E.L.T. 339 (Tri. Chennai)] (f) E.P. Electropressings Pvt. Ltd. Vs . Commissioner of C.Ex. Delhi-II [2002 (140) E.L.T. 230 (Tri. Del.)] (g) Mihir Textiles Ltd. Vs.Collector of Customs, Bombay [1997 (92) E.L.T. 9 (S.C.)]. (h) Assam Tubes Ltd. Vs . Commissioner of C.Ex. Shillong [2014 (313) ELT 746 (Tri. Kolkata)] (i) Madras Cements Ltd. Vs . Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for- (a) the receipt, consumption and inventory of inputs used- (i) in or in relation to the manufacture of exempted goods; (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services- (i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal; (ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance upto the place of removal; (iii) for the provision of exempted services; and (iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (ii) and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions as provided under Sub Rule (3A)(a) (i) to (iv) inasmuch as the appellant have not given said information in writing to the Jurisdictional Superintendent of Central Excise. Secondly the appellant, as provided under Clause (b) of sub rule (3A) have not paid the amount of Cenvat on monthly basis and paid after almost 11 months. 5.1 We have observed that in Rule 6(3) prevalent at the relevant time, two options have been provided:- (i) Payment of 5% on value of exempted services. (ii) Payment of an amount equal to the Cenvat Credit amount attributed to input services used in or in relation to manufacture of exempted goods or provision of exempted services as provided under sub rule (3A) (b). It is observed that the appellant has availed the option provided under sub rule (3)(ii) of Rule 6 and paid an amount as per sub rule (3A) alongwith interest and intimated the same to the jurisdictional superintendent in writing vide letter dated 14/3/2012. From the perusal of the said letter, we observed that the appellant categorically stated in the said letter that payment of Cenvat Credit which they have made alongwith interest is in accordance with Rule 6 (3A) of Cenvat Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption of exempted goods or exempted services; (v) Cenvat credit of inputs and input services lying in balance as on the date of exercising the option under this condition. As per the submission of the appellant and perusal of their letter alongwith enclosed details, it is found that more or less all these particulars were intimated to the Jurisdictional Superintendent. The appellant has been filing their returns regularly on monthly basis to the department. On perusal of the copies of the such return submitted alongwith appeal papers, it is observed that the particulars, as required under clause (a) of sub rule (3A) of Rule 6 has been produced to the range superintendent. Therefore all the particulars which are required to be intimated to the Jurisdictional superintendent while exercising option stand produced. Though these particulars have not been submitted specifically under a particular letter, but since these particulars otherwise by way of return and some of the information under their letters has admittedly been submitted, we are of the view, as regard this compliance of Rule 6(3A), it stood made. 5.3 As regard the contention of the adjudicating authority that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny of the option at a particular time, then option of payment of 5% will automatically be applied. Therefore we do not understand that when the appellant have categorically by way of their intimation opted for option provided under sub-rule (3)(ii), how Revenue can insist that option (3)(i) under Rule 6 should be followed by the assessee. 5.5 As discussed above and in the facts of the case that actual Cenvat credit attributed to the exempted services used towards sale of the bought out cars in terms of Rule 6(3A) comes to ₹ 4,06,785/- where as adjudicating authority demanded an amount of ₹ 24,71,93,529/-. In our view, any amount, over and above ₹ 4 ,06,785 /- is not the part of the Cenvat Credit, which required to be reversed. The legislator has not enacted any provision by which Cenvat credit, which is other than the credit attributed to input services used in exempted goods or services; can be recovered from the assessee. 5.6 We have gone through judgments relied upon by the Ld. A.R. In the arguments, we found that as regards the judgments on the issue of availment of Cenvat credit on the input or input services used in dutiable and exempted goods, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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