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TMI Blog2019 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... cenvat credit in respect of common input service used in the manufacture of dutiable and exempted goods the demand equal to 10%/ 5% will not sustain - reliance paced in the case of M/S. MERCEDES BENZ INDIA (P) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [2015 (8) TMI 24 - CESTAT MUMBAI]. Thus, once the appellant have opted reversal of the credit in respect of service attributed to the exempted goods and in case of delay, the interest is also paid then the demand of 5% / 10% under Rule 6(3) cannot be made - In the present case since the Ld. Commissioner has demanded 5% / 10% of the value of exempted goods, he has not verified the correctness of actual cenvat credit attributed to exempted goods as reversed by the assesse. Therefore, only for the purpose of verification of such quantification of reversal, the matter in case of assessee s appeals is remanded to the original authority - issue of penalty is also to be considered - appeal allowed by way of remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferred to the factory, therefore, no process is carried out on the Low Grade Bauxite. Hence, the same is not an excisable goods. He relies upon the following judgments wherein it has been held that process of mining is not a manufacture of goods, therefore, the said goods are not excisable. * CCE vs Steel Authority of India Ltd. 2003 (154) ELT 65 (Tri. Kol) * Hyderabad Industries Ltd 195 (78) ELT 641 (SC) * Mineral and Metals Trading Corp. of India 1983 (13) ELT 1542 (SC) * Wolkem India Ltd. 1997 (92) ELT 219 (Tri.) 3. He further submits that Rule 6 of Cenvat Credit Rules 2004 does not apply for non-excisable goods. As per definition of exempted goods given in Rule 2(d) of Cenvat Credit Rules, 2004, the exempted goods are only those goods which are excisable goods. Since Low Grade Bauxite is not an excisable goods it cannot considered as exempted goods also. Hence, provisions of Rule 6 does not apply. Consequently, the demand of 10% of the value of Low Grade bauxite is not legal and correct. For this proposition, he relies upon the following judgments: * Sahni Strips & Wires (P) Ltd. 2012 9283) ELT 418 (Tri. Del.) * SCI India Ltd. 2008 (221) ELT 565 (Tri.) * S D F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 72 of Finance Act, 2010, according to which the provision for proportionate reversal in respect of the common input credit was brought. Therefore, the intention of the legislature was always that even the proportionate credit attributed to non-excisable, exempted goods is made no further demand can be raised. He submitted that even for proportionate reversal of credit it should be confined to the common credit like telephone, audit fees etc. While computing the proportionate amount of reversal. The credit which has been exclusively used in the factory for manufacture of high grade bauxite which is cleared on payment of duty should not be considered while computing the proportionate amount of credit. He submits that rule 6 of Cenvat Credit Rules, 2004 was amended w.e.f. 1-4-2008 whereby the reversal of credit on proportionate basis was introduced. At the time of introduction of proportionate reversal under Rule 6(3), the TRU Circular no. F. No. 334/1/2008-TRU New Delhi, dated 29th February, 2008 clarified that Rule 6 "is being amended to provide the following options to a provider of output services, for providing taxable as well as exempted services and opting not to maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue's appeal seeking increase in the penalty equivalent to the demand confirmed deserve to be allowed. 11. We have considered the submissions made by both the sides and perused the records. The case of the department is that since the assesse has availed the cenvat credit in respect of common input service used in the manufacture of Low Grade Bauxite which is cleared without payment of duty and also for manufacture of High Grade Bauxite which was cleared on payment of duty, the appellant is required to pay 10%/5% of the value of the goods cleared without payment of duty (exempted goods). From the facts it is undisputed that the appellant have been reversing cenvat credit proportionate to the credit on input service used for exempted goods along with interest, therefore, first the credit though availed at the time of receipt of input service but after reversal thereof along with interest the position is if credit was not availed. Moreover this issue has been consistently considered in various judgments wherein it was held that if the assesse reversed the cenvat credit in respect of common input service used in the manufacture of dutiable and exempted goods the demand equal to 10%/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b). (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow [any one] of the following options, as ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most 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) along with 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 Credit Rules. With this act of the appellant, it is clear that the appellant opted for the option as provided under Rule 6(3)(ii) of the Cenvat Credit Rules, 2004, in accordance to which, the appellant are supposed to an amount equivalent to Cenvat Credit on input service attributed to the exempted service in terms of Rue 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 along with 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 option should be given in beginning and before exercising such option, we are of the view that though there is no such time limit provided for exercising such option in the rules but it is a common sense that intention of any option should be expressed before exercising the option, however the delay can be taken as procedura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 provision involved in the present case i.e. Rule 6(3) (i) (ii) (3A) has not been considered in the relied upon judgments, therefore the same are not applicable. As regard the other judgments, all these judgments having different facts and dealing with other provisions such as SSI exemption, exemption notification, etc., which are not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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