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TMI Blog2021 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... the correctness of actual cenvat credit attributed to exempted goods as reversed by the assesse. It can be seen that on the identical facts that once the assessee reversed the proportionate credit along with interest in the case of any delay, the demand of 5%/10% under Rule 6(3) is not sustainable - Appeal allowed - decided in favor of appellant. - Excise Appeal No.10506 of 2013 - A/12475/2021 - Dated:- 29-10-2021 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri. Amal Dave, Advocate for the Appellant Shri Vinod Lukose, Superintendent (AR) for the Respondent ORDER The issue involved in the present case is that whether the appellant is required to pay 5%/10% of the value of exempted goods in terms of Rule 6(3) of Cenvat Credit Rules, 2004, when the appellant have reversed the Proportionate Cenvat credit along with interest for the period post 01.04.2008. The case of the department is that the retrospective amendment in Rule 6 was effective only up to 31.03.08, therefore, subsequent to that period since, the appellant has availed the Cenvat Credit on common input/input service for the manufacture of exempted and dutiable final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above judgment, we are of the considered view that 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. As regard the Revenue s appeal since the penalty is consequential to demand and final outcome can be arrived at only after verification of reversal, the Revenue s appeal are also remanded to the original authority. All the appeals are disposed of by way of remand to the original authority in the above terms for passing a fresh de novo order. Welspun Corp. Ltd Vs. CCE, Kutch-2019 (368) ELT 179 (Tri. Ahmd.) 6. We have carefully considered the submissions made by both the sides and perused the records. The limited issue to be decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has option either to pay 5%/10% of value of exempted goods or pay an amount determined under sub-rule (3A) i.e. proportionate credit attributed to the exempted goods. The appellant rightly availed the option of sub-rule (3A) of Rule 6 of CCR, 2004, the only lapse on the part of the appellant is that the payment of Cenvat credit was made belatedly, however the appellant have paid interest for the period right from availing the Cenvat credit till the payment/reversal of proportionate Cenvat credit which create a position as if the appellant have not availed Cenvat credit right from the date when Cenvat credit was availed. Therefore there is no reason for imposing option under Clause (i) of Rule 6(3) i.e. payment of 5%/10% of the value of exempted goods. This issue has been considered by this Tribunal time and again, though the appellant have relied upon almost 20 judgments on this issue which are directly applicable. However, we are referring some of the judgments as under : The Hon ble Tribunal in the case of Jay Balaji Industries Ltd. - 2017 (352) E.L.T. 86 (T) held in para 5 that : 5. The Hon ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exempted final products is reversed along with interest subsequent to removal of exempted final products, then the appellant cannot be said to have taken credit of inputs used in or in relation to the manufacture of exempted final products, and they need not pay an amount @ 8% or 10% of the sale price of exempted final products. The adjudicating authority has worked out the demand of ₹ 88,41,543/- on the basis of 8% or 10% of the sale price of exempted final products cleared by the appellant during the material period, while the respondent claims that the input credit attributable to manufacture of exempted final products is only ₹ 7,85,573/-, which they have reversed. In the present case we observed from the case records that the appellant has furnished relevant data/documents available at pages 372 to 396 of the appeal papers filed in Appeal No. E/449/2011 showing Cenvat credit reversed/required to be reversed on inputs used in the manufacture of exempted final products during the material period. The appellant has also placed on record copies of 21 invoices at pages 349 to 370 of the appeal papers of Appeal No. E/449/2011 showing receipt of exempted input (Alpha B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provider of output service shall intimate in writing the department regarding the option exercised. In the present case, admittedly there is no intimation given by the appellant informing his exercise of option. The contention of the department is that when the appellant has not intimated his option in writing then the appellant is bound to pay the duty amount calculated under the first option. I am afraid I cannot endorse this contention. The said rule does 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) workabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns filed by them. Therefore, the impugned order is not sustainable on merit as well as on limitation and therefore, I set aside the impugned order by allowing the appeal of the appellant with consequential relief, if any. 7 . In view of the above, the issue is no longer res integra, therefore, the demand confirmed equal to 5%/10% of value of the exempted goods is not sustainable. As regard the submission of Ld. Counsel regarding the limitation, we find that firstly, the appellant had not utilized the Cenvat credit attributed to the exempted goods, secondly the fact regarding the availment of credit and manufacture and clearance of exempted and non-excisable goods are very much on record, therefore, the suppression of fact cannot be attributed on the part of the appellant. We also find that since the issue regarding reversal of Cenvat credit under Rule 6(3) is contentious and various cases on the same issue have been made out which can be seen from such of judgment given above, therefore, on the issue related to Rule 6(3) particularly in the facts of the present case it cannot be said that the appellant had mala fide intention to evade payment of duty. Therefore, demand for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of manufacturing process, two inputs, namely, Caustic Soda Lye and Hydrochloric Acid are used, resulting in manufacture of both dutiable and non-dutiable products. The Revenue took a view that no duty was payable on some of the final products and hence, duty at the rate of 8% of the value of such final products was required to be paid and CENVAT credit was wrongly availed of. Four show cause notices relating to an exempted product and nine show cause notices relating to bye-products were issued, the period being from April 2000 to March 2004. The four show cause notices were dropped by the Commissioner himself, while in case of nine show cause notices, the proposal to levy duty was confirmed. The matter was carried in appeal before the Tribunal. 4 . After hearing the parties, the Tribunal has issued the following directions. (6) We have carefully considered the submissions. We are convinced that the demand is highly disproportionate to the credit availed on the common inputs which could be attributed to goods which have been cleared without payment of duty. We are not going to the merits of the decision of the Commissioner in so far as the same relates to dropping of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit taken on common inputs and accept the offer to reverse such entire credit on common inputs insofar as they relate to demand proposed in the nine show cause notices. The Tribunal has also recorded the undertaking given by the respondent-assessee that if any further credit is to be reversed, the same shall be reversed within four weeks from the date of receipt of the communication from the Department. Hence, in the facts and circumstances of the case, it is apparent that the entire controversy has been decided by the Tribunal by merely remitting the matter back to the Adjudicating Authority to re-determine the credit in accordance with law. If any reversal has been made by the respondent-assessee, the same is subject to verification and adjustment if ultimately any further amount is found reversible. 8 . According to the respondent-assessee, the exercise directed by the Tribunal has been carried out as recorded in order dated 2-4-2007, which statement is disputed by the learned advocate for the appellant. 9 . In the circumstances, in absence of any question of law, as proposed or otherwise, much less a substantial question of law, the appeal is dismissed. CCE Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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