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TMI Blog2016 (6) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... es not say that on failure to intimate, the manufacturer / service provider would lose his choice to avail second option of reversing the proportionate credit. Rule 6(3A), as seen expressly stated is nothing but a procedure contemplated for application of Rule 6(3). Therefore, the argument of the Revenue that the requirement to intimate the department about the option exercised, is mandatory and that on failure, the appellant has no other option but to accept and comply Rule 6(3)(i) and make payment of 5% / 10% of sale price of exempted goods / value of exempted services is not acceptable or convincing. - The Rule does not lay down any such restriction. The procedure and conditions laid in Rule 6(3A) is intended to make Rule 6(3) workab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of finished goods cleared at nil rate of duty under exemption notification No.6/2006-CE dt. 01/03/2006 did not maintain separate accounts and thereby are liable to pay 10% / 5% of sale price of exempted goods as provided in Rule 6(3)(i) of CENVAT Credit Rules, 2004. The demand raised in the show-cause notice was ₹ 26,55,364/- being the amount payable on goods valued at ₹ 3,81,58,865/- cleared during the period March 2009 to September 2009, along with interest and penalty. After adjudication the adjudicating authority confirmed the demand, interest and imposed penalty of ₹ 5,00,000 under Rule 15 of CENVAT Credit Rules, 2004. The appellants carried the issue in appeal and vide the order impugned herein the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the amount payable under the first option will come to ₹ 24,55,364/-. The appellants chose the second option and reversed the proportionate credit of ₹ 3,70,612/-. The learned counsel argued that the demand is raised merely on the ground that appellants failed to comply the procedure of exercising the option by intimating in writing to the department. He argued that Rule 6(3A) provides for the procedure for determining the payment of amount under Rule 6(3)(ii). Though it is stated that manufacturer has to intimate the department about the exercise of option, merely because of failure to intimate the exercise of option, it cannot be said that Rule 6(3)(i) would automatically apply. Further, that since the appellant had duly rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as calculated under first option, Rule 6(3)(i), and that the demand of duty interest and penalty has been rightly confirmed by the Commissioner. He also put forward a submission that in case the appellants are allowed to reverse the credit, the matter has to be remanded for quantification of the proportionate credit. 5. I have heard both sides and perused the appeal papers. Rule 6 of the CENVAT Credit rules, 2004, speaks about obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. Sub-rule (1) of Rule 6 states that CENVAT credit shall not be allowed on such quantity of input or input services which is used in the manufacture of exempted goods or for providing exempted services. Sub-rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions, namely:- (a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely:- (i) name, address and registration No. of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description of dutiable goods or taxable services; (iv) description 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; The above Rule 6(3A) states that while exercising the option, the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on the judgment passed by co-ordinate Bench of CESTAT in Mercedes Benz India (P) Ltd. Vs. CCE, Pune-I [2015-TIOL-1550-CESTAT-MUM]. The issue under consideration is squarely covered by the said judgment. In Rathi Daga Vs. CCE, Nashik [2015(38) STR 213 (Tri. Mum.)] and Foods, Fats Fertilisers Ltd. Vs. CCE, Guntur [2009(247) ELT 209 (Tri. Bang.)], it has been held that the condition in Rule 6(3A) to intimate the department is only a procedural one and that such procedural lapse is condonable and denial of substantive right for such procedural failure is unjustified. Taking into account the facts, evidence and following the precedents cited above, I am of the view that the demand raised is not legal and proper. 8. I may now ..... X X X X Extracts X X X X X X X X Extracts X X X X
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