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TMI Blog2018 (1) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter needs to be remanded only for the purpose of re-quantification of proportionate credit as claimed and submitted by the appellant. The demand of 5% of the value of traded goods confirmed invoking Rule 6(3)(i) is not sustainable. Appeal allowed by way of remand. - Appeal No.E/86103/16 - A/91799/2017 - Dated:- 8-12-2017 - Shri Ramesh Nair, Member (Judicial) Shri G. Natarajan, Advocate for Appellant Shri Ajay Kumar, Addl. Commissioner (AR) for Respondent ORDER Per : Ramesh Nair The appellants are engaged in manufacturing of pharmaceuticals goods. Apart from their own manufacturing, they are also engaged in trading activity of bought out products. 2. The case of the Department is that the appellants are availing credit on common input service which was used for manufacturing of dutiable goods as well as trading activity. Accordingly, a demand of 5% of the sale value of traded goods was raised in terms of Rule 6(3)(i) of CENVAT Credit Rules, 2004. The demand was confirmed by the adjudicating authority and ordered for recovery of interest under Section 11AB and also imposed penalty of equal amount under section 11AC. Therefore, the appellants ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand confirmed by the adjudicating authority i.e. equal to the 5% of the value of the traded goods should be sustained. 5. I have carefully considered the submissions made by both sides. I find that the appellant have admittedly reversed the credit attributed to the trading activity availing the option available under rule 6(3)(ii). Therefore, Department cannot insist for some other option i.e. Rule 6(3)(i). 6. As regards the issue that the appellant was not following the condition for availing the option of Rule 6(3)(ii), I am of the view that it is a procedural requirement and for want of procedural requirement, substantial benefit available to the assessee cannot be denied. This very issue has been considered in various judgments of this Tribunal, therefore, the issue is no longer res integra. In the case of Mercedes Benz India (Pvt.) Ltd. Vs. Commissioner of Central Excise, Pune-I - 2015 (40) STR 381 (Tri-Mum) it was held as under: - 5.2 As regard the delay in payment, if any, the appellant have discharged the interest liability on such delay. Regarding the compliance as provided under Clause (a) of sub-rule (3A) of Rule 6 the appellant while exercising this op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6(3)(ii). The meaning of the option as argued by the Ld. Sr. Counsel is that option of right of choosing, something that may be or is chosen, choice, the act of choosing . From the said meaning of the term option , it is clear that it is the appellant who have liberty to decide which option to be exercised and not the Revenue to decide the same. 5.4 We find that the appellant admittedly paid an amount of ₹ 4,06,785/- plus interest, this is not under dispute. Therefore in our view, the appellant have complied with the condition prescribed under Rule 6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of ₹ 24,71,93,529/- of the total value of the vehicle amounting to. ₹ 494,38,70,577/- sold in the market cannot be demanded. We are also of the view that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable. Following the aforesaid judgment, this Tribunal in the case of Bhingar Urban Co-op Bank Ltd. Vs. Commissioner of Central Excise, Aurangabad 2016 (41) STR 673 (Tri-Mum), has held as under: - 6. As regard the submission of ld. Counsel on the issue whether the interest earned by the bank on loans and advances, whether it is exempted service or taxable service, I read Board Circular DOF No.334/1/2012/TRU, dated 16 March, 2012 and the relevant paras are reproduced below : Point 20. Rule 6 of Valuation Rules prescribed inclusions and exclusions to the taxable value. Following changes are being made here - i. --------- ii. In sub-rule (2) clause (iv) regarding exclusion of interest on loans is proposed for substitution with interest on (a) deposits; and (b) delayed payment of any consideration for the provisions made (service/goods). This will keep such amounts outside the value and thus not be relevant for reversal of credit under Rule 6(3) of Cenvat Credit Rules, 2004. Interest on loans will now be an exempt income rather than an exclusion from value. iii. -------- Point 26. Interest on loans, advances will now be an exempt service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases against many assessees on this issue and it was observed that as against petty amount of Cenvat credit huge amount of lacs and crores were demanded from the assessee invoking provisions of Rule 6(3). After realizing serious anomaly in the provisions the Government brought retrospective amendment in Rule 57CC of Central Excise Rules, 1944 and Rule 6 of Cenvat Credit Rules, 2002/2004. According to said retrospective amendment in all such cases option was given to the assesee that if the asesssee opt for payment of an amount of Cenvat credit attributable to the exempted goods/services along with interest @ 24% all the proceedings shall stand concluded and no further demand shall be made. In the present case appellant not only paid the amount required under the retrospective amendment but they paid entire Cenvat credit and also paid 24% interest. As regard the procedure prescribed under retrospective amendment provisions, I am of the view that substantial requirement of the amendment is that assessee should pay an amount of Cenvat credit attributable to the exempted services along with 24% interest. Procedure such an application to the Commissioner, is only for the purpose of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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