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TMI Blog2016 (7) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... DR for the Respondent ORDER Per B Ravichandran : The appeal is against order dated 27.6.07 of Commissioner (Appeals I) Indore. The appellants are engaged in the manufacture of plastic pipes, accessories etc and sprinkles systems liable to Central Excise duty. They were also availing Cenvat Credit of duty paid on inputs in terms of Cenvat Credit Rules, 2004. Some of their final products are exempted from payment of duty. In terms of sub rule (3) of Rule 6 of Cenvat Credit Rules, the manufacturer of final product having both dutiable and exempted, should pay an amount equal to 10% of the price of exempted final products charged by the manufacture for sale of such goods. The total price for this purpose shall exclude sale tax and other taxes, if any, paid on such goods. Upon scrutiny of records maintained by the appellant, the officers found that while arriving at the 10% amount, the appellants have deducted the said amount from the price and calculated the amount payable on such cum-duty basis. Taking a view that method adopted by the appellant to calculate the 10% amount payable in terms of Rule 6(3) has been wrongly arrived at resulting in short payment, proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount equal to 10 per cent of the total price excluding sales tax and other taxes, if any, paid on such goods. The Explanation I provides that manufacturer can pay the said amount by debiting the cenvat credit or otherwise. The point for decision is while arriving at 10% amount on the price of exempted goods, whether is it is permissible to deduct 10% from the gross price and calculate the said amount after such deduction. The appellant pleaded that 10% payment stipulated by the said rule is a statutory levy which should be treated as other taxes and eligible for exclusion from the price. The impugned order rejected this plea on the basis of Tribunal's decision in the case of Mahindra Mahindra Ltd. vs. CCE Mumbai [2007 (211) ELT481 (Tri-Mum)]. In the said case, the Tribunal held that 10% amount payable under Rule 6(3) is neither in the nature of money raised for Government nor a tax deduction and as such, not leviable for exclusion from the price for arriving at the amount to be paid. 6. It is seen that the Tribunal in the appellants own case vide Final Order No. 509998-50999/2016 dated 10.3.2016 held that reversal of 10% amount on the value of exempted goods as a stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation of demand against the appellant is not sustainable. Accordingly, we set aside the same and allow the appeal. Per Archana Wadhwa : 8. After having gone through the order proposed by my learned brother Shri B. Ravichandaran, Member (Technical), I find myself not in agreement with the same. Accordingly, a separate order is being recorded. 9. As is clear from the factual background duly recorded by my brother, the legal issue required to be resolved is as to whether while paying the amount of 10% of the price of the exempted final product in terms of provisions of Rule 6(3) of Cenvat Credit Rules, the said 10% is required to be considered as other tax and as such, the price at which 10% is required to be paid, should be arrived at after deducting the said amount. 11 . A reading of the entire provisions of Rule 6, shows that an assessee is not entitled to avail Cenvat credit of duty in respect of the inputs which stand used in the manufacture of exempted goods. However, wherever the assessee is manufacturing dutiable as also exempted final product, he is under a legal obligation to maintain separate accounts of the inputs being used in the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eutralize the cenvat credit effect. As such, in my views, it can be safely concluded that such provisions of law is facilitating piece of legislation, facilitating an assessee to maintain common inputs credit amount and to reverse a particular amount so as to neutralize the credit which was inadmissible to him ab initio . I also take note of explanation I which is to be effect that the amount required to be paid in terms of said provisions of law would by debiting the cenvat credit amount. The fact that such payment is required to be made by debiting the cenvat credit is another factor which leads one to conclude that said reversal is primarily and basically for neutralizing the cenvat credit which the assessee has taken and which was not available to him right from the beginning. 13. The question which arises is as to whether such reversal can be said to be covered by the expression other tax appearing in Rule 6(3)(b) so as to exclude the same from the price of exempted final product. My learned brother has followed the earlier order passed in the same assessee' case (where he was one of the member) wherein it was held that the said payment is compulsory exaction m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee exercising the option for common maintenance of inputs. Such reversal cannot be compared with the compulsory exaction, considered by the Hon'ble Supreme Court in the case of Kisan Sahakari Chini Mills Ltd. 15. Similarly in the case of Chhata Sugar Co. Ltd., the issue was as to whether administrative charges imposed under the U P Sheera Niyantaran Adhiniyam Act have to be held as taxes so as to uphold the deduction of the same for the purpose of arriving at the correct assessable value in terms of the provisions of section 4 of the Central Excise Act. It stand observed in the said decision that the administrative charges is in addition to the price at which goods are sold in the ordinary course of business by the sugar factory. The pre-dominant object of the U P Act is to maximise the revenue by way of tax while regulating the storage and supply of molasses. The beneficiary under the said Act is the distillery and it is the distillery which provides important source of revenue to the State. It was in these circumstances, the Hon'ble Supreme Court held the levy of the administrative charges is in the nature of tax. In the present case, by reversing a particular amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , final product being cleared by the appellant is admittedly exempted goods, if a payment of 10% is considered to be a levy and consequently as a tax, the goods which are otherwise exempted, would become dutiable if we consider the said payment of 10% as a tax levy. The exempted goods would no longer be considered as an exempted goods. Such a stand would introduce self contradiction inasmuch as on one hand, requirement of reversal of 10% would arise because the goods are exempted and if such a reversal has to be equated with the tax amount, the exempted goods would become dutiable, thus calling for no reversal. This will admittedly lead to a chaotic situation. 19. In view of the above analysis of the issue, I am of the view that no deduction of the amount of reversal of 10% amount is required to be extended to the assessee. However, as there are contradictory decisions as discussed above, and there is a decision in the same assessee's case which stand passed without considering the precedent decision, I am of the view that the matter should be placed before the Larger Bench of the Tribunal so as to resolve the issue. Difference of Opinion Whether the amount of 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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