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TMI Blog2019 (8) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly registered under Business Support services. They are also engaged in some trading activity of GPS units procured from suppliers and sold to customers for tracking the movement of vehicles on real time basis. In terms of the order received from customers, the Appellant provides the services of vehicle tracking system and also sells the GPS units to different customers. The appellant maintains common balance sheet for their manufacturing as well as trading activity. The appellant availed CENVAT Credit under Cenvat Credit Rules, 2004 on input and input services used in or in relation to the manufacture of finished goods. In this background, a spot memo dated 29/11/2013 was issued by the Service tax audit team and the Appellant was asked to pay an amount of Rs. 6,94,356/- being 6% of the exempted turnover under Rule 6(3)(i) of the Cenvat Credit Rules, 2004. The Appellant vide their reply dated 18/08/2014 to the said spot memo, paid an amount of Rs. 2,467/- vide Challan No. 00185 dated 16/08/2014 along with interest of Rs. 807/- being proportionate CENVAT Credit reversed by following the procedure as prescribed in Rule 6(3)(ii) of the said Rules. However, Show cause notice dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with rule 6(3A) of Cenvat Credit Rules, Rules. He states that since the appellant reversed the credit along with interest, thus compliance of the procedure as laid down under rule 6(3A) was duly made. 6. The Ld. C.A. also submits that it is not provided under the law that if there is any procedure infraction in availing the option of Rule 6(3)(ii), the option provided under Rule 6(3) (i) shall automatically apply. Two options have been provided under the law to the assessee. It is a choice of the assessee which option is to be availed. In the present case, the appellant admittedly availed the option available under rule 6(3)(ii) read with rule 6(3A). Therefore, the department cannot insist to avail the option of Rule 6(3)(i) and demand huge amount of money which is otherwise not payable by the appellant, nor it is part of CENVAT Credit availed by the Appellant. He submits that when the options have been provided, the department has no say for choice of the assessee, the assessee who has liberty to choose any of the option and therefore in the present case, the appellant has opted for the option available under Rule 6(3)(ii) of Cenvat Credit Rules, therefore department has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual credit attributed to the quantum trading sale in terms of Rule 6(3A) along with interest following the option available under Rule 6(3)(ii). The relevant rule is reproduced below: "RULE 6. [Obligation of a manufacturer or producer of final products and a [provider of output service]]. - (1) The CENVAT credit shall not be allowed on such quantity of [input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services], except in the circumstances mentioned in sub-rule (2) : [Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.] [(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided also that in case of transportation of goods or passengers by rail the amount required to be paid under clause (i) shall be an amount equal to 2 per cent. of value of the exempted services.] Explanation I. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. [Explanation II.- For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs used exclusively in or in relation to the manufacture of exempted goods or for provision of exempted services and on input services used exclusively in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services." 10. In the present case, it is an admitted fact that the appellant did not maintain separate accounts for the input services used in or in relation to the provision of taxable service as well as exempt service i.e. trading of goods. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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