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TMI Blog2015 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004. In view of the amendment in 2010, once the amendment is not applicable, the benefit of subsequent reversal will not be available. The amendment brought out in the year 2010 clearly provided for subsequent reversals by the manufacturers where they had omitted to reverse the credit earlier and according to the law they would have been required to pay 6%/8%/10% as the case maybe. Option to avail the provisions of Rule 6(3A) in writing - Held that:- If we accept that even after 01.03.2008 that would be the situation, we will be rendering the provisions of Sub-rule (3A) of Rule 6 of CCR 2004 totally irrelevant and otiose. This cannot be the intention of the legislature. In such a situation applying the decision which was rendered prior to 01.03.2008 and taking a view that option can be exercised at any time or reversal can be made subsequently would be totally against the law as well as the intention of the legislature. The learned DR countered this by submitting that the fact that the explanation provides that it shall not be withdrawn during the remaining part of the financial year shows that it has to be exercised within the same financial year. However it is difficult t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices which is intended for use for providing taxable output services as per provisions of Rule 6(2) of Cenvat Credit Rules, 2004. Further as per provisions of Rule 6(3) of Cenvat Credit Rules, 2004 if the provider of output service, opting not to maintain separate accounts, (i) shall either pay an amount equal to 8% of the value of the exempted services or (ii) shall pay (reverse) an amount equivalent to the Cenvat credit attributable to the input services used for providing the exempted services on monthly basis subject to the conditions and procedures specified in sub-rule (3A). 1.2 On finding that appellant had not followed the procedure laid down, proceedings were initiated culminating in confirmation of demand for the amount as per the provisions of Rule 6(3) (i) of Cenvat Credit Rules 2004 on the value of exempted services which worked out to ₹ 14,50,720/- (Rupees Fourteen Lakhs Fifty Thousand Seven Hundred and Twenty only). As a result of the proceedings, the original adjudicating authority confirmed the demand for the amount with interest and also imposed penalty equal to the amount demanded. On an appeal filed by the assessee, the Commissioner (Appeals) took the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the submissions made by both the sides. Commissioner s conclusion in the impugned order that in view of the retrospective amendment to Cenvat Credit Rules, procedure followed by the assessee can be said to have fulfilled the requirement in my opinion is not correct. This is in view of the fact that amendments were carried out and benefit of payment of proportionate credit or Cenvat credit attributable to exempted goods and services was extended only to manufacturers and not to service providers. It was submitted by the learned CA that this was an omission on the part of legislature and there was no intention to exclude output service providers. Unless the words are ambiguous and there is lack of clarity it is not appropriate and proper to read the law differently. In this case there is no such ambiguity or lack of clarity in the amendments or Finance Act brought out in the year 2010. Therefore I am unable to consider this submission. The second conclusion the Commissioner has reached is that the omission or intention is only technical and reversal has been done as required under Rule 6(3) (ii) of the Cenvat Credit Rules 2004. In view of the amendment in 2010, once the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, it amounts to non-availment of credit. The decision of the Hon ble High Court cited by the learned CA is one such decision and there is no dispute that that was the situation prior to 01.03.2008 and wherever credit was reversed irrespective of the date of reversal, a view was taken that such reversal has to be considered as having not availed the Cenvat credit at all. But the fact is that Sub-rule (3A) of Rule 6 of Cenvat Credit Rules provides a detailed procedure for reversal of credit and also exercising of an option to either maintain separate account or follow the procedure. In such a situation can it be said that an assessee still has an option to reverse the credit subsequently as and when either the department points out or on assessee s own initiative? If we accept that even after 01.03.2008 that would be the situation, we will be rendering the provisions of Sub-rule (3A) of Rule 6 of CCR 2004 totally irrelevant and otiose. This cannot be the intention of the legislature. In such a situation applying the decision which was rendered prior to 01.03.2008 and taking a view that option can be exercised at any time or reversal can be made subsequently would be totally a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a special case. He also submits that assessee would submit another letter with all the details required so that the deficiency in their letter dated 30.07.2009 can be made good. I am inclined to allow this. This is because the Tribunal is a creature of the statute and unless the statute provides for exempting or overlooking certain things, it may not be appropriate for the Tribunal to follow that process. Moreover in this case there is no precedent decision to be followed. 11. Another submission that was made by the learned CA was as per the definition of taxable service clearance to Jammu and Kashmir were exempt from payment of service tax in view of the fact that provisions of Section 64 excludes Jammu Kashmir for the purpose of levy of service tax. For better appreciation the Section is reproduced. Section 64. Extent, commencement and application (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. (3) It shall apply to taxable services provided on or after the commencement of this chapter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore is whether the assessee can be given an option to consider the letter given by them on 30.07.2009 as a letter exercising the option to reverse the proportionate credit or not and if so whether they can be allowed to credit good and make good the deficiencies in the letter. I find that even on 03.07.2009, the assessee had taken a stand that they would opt for reversal of proportionate credit and opt to follow the procedure for the Financial Year 2009-10. Relevant paragraph is paragraph 2 of the letter dated 03.07.2009 and the same is reproduced. 2. As regards availing Cenvat credit on common input services used both in exempted and taxable services; we submit that the value shown in the ST-3 Returns as the value of exempted services includes the value of services provided to SEZ units. As per Rule 6(6), the provisions of Sub Rules (1), (2), (3) and (4) is not applicable if the exempted clearances are to the clearances to SEZ units. The only exempted service we have is the services rendered in the state of Jammu and Kashmir. In this regard we wish to submit that Rule 6(3) of Cenvat Credit Rules has been amended effective from 01.03.2008 and the amended provision provides th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. The learned DR countered this by submitting that the fact that the explanation provides that it shall not be withdrawn during the remaining part of the financial year shows that it has to be exercised within the same financial year. However it is difficult to come to the conclusion that because of this particular clause, the explanation has to be understood to mean that option should be exercised within the financial year. 17. The discussion above would show that the issue is highly arguable, debatable and involves complex legal problems. Even though I have held against the assessee as regards provision of services in Jammu and Kashmir and the interpretation of the provisions of law by them and by the assessee and also I have taken a view that the exact conclusion regarding explanation is difficult to arrive. In view of the facts and circumstances in this case and in view of the fact that Commissioner (Appeals) has already allowed benefit wrongly as held by me and further in view of the complexity of the nature, in my opinion as a special case, the assessee can be allowed to regularize the activity undertaken by them by submitting a detailed letter as contemplated in Sub-rul ..... 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