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TMI Blog2022 (7) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice that the appellant was rendering an exemption service when it was manufacturing dutiable goods. The demand has been made under Rule 6 (3) of CCR, 2004. It has been held by the Hon ble High Court of Andhra Pradesh and Telangana in the case of M/S TIARA ADVERTISING VERSUS UNION OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] that the various options under Rule 6 are options given to the assessee and the Revenue cannot choose one of the options and force it upon the assessee. Even if the assessee is rendering exempted services or manufacturing exempted goods and using common input services no demand can be sustained under Rule 6 (3) as this is only one of its options available to assessee to fulfill its objection. Thus, the demand of an amount under Rule 6(3) of CCR cannot be sustained even if the appellant was rendering exempted services and had taken CENVAT credit on common inputs/input services. The impugned order, therefore, cannot be sustained and is liable to set aside. Appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL NO. 50200 OF 2020 - FINAL ORDER NO. 50625/2022 - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest under provisions of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 should not be demanded and recovered from them on the above amount so not paid, since due, and (iii) Penalty under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994, should not be imposed upon them . 3. The appellant contested the SCN on the ground that it was not rendering any service, but was manufacturing goods on job work basis for the principal and has been availing the benefit of Central Excise Notification No. 214/86-CE dated 25.03.1986. The Department was well aware of this fact. Since its activity amounts to manufacture it cannot also simultaneously become a service. Therefore, no demand can be raised for reversal of an amount equal to 7% of the value of the job work under Rule 6 (3) of Cenvat Credit Rules. 4. Not agreeing with the submissions, the Original Authority has passed the following order :- (i) I confirm the demand of amounting to Rs. 1,67,85,366/- (Rupees One Crore Sixty Seven Lakhs Eighty Five Thousand Three Hundred and Sixty Six only) payable under Rule 6 (3) (i) of the CENVAT Credit Rules, 2004 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant was not manufacturing at all and its job work does not amount to manufacture. In the SCN, the Department has contended that the activity of job work is an exempted service as defined in clause (e) of Rule 2 of CCR as by virtue of Clause (f) of Section 66D of the Finance Act, 1994, any process amounting to manufacture of production of goods is covered under the negative list. As the appellant was only rendering the service and was not manufacturing goods, the appellant has taken credit of common input services used in dutiable goods and exempted service, and hence was liable to pay an amount equal to 7% of the value of exempted service as job work in terms of Rule 6 (3) of CCR. (2) The Department s interpretation is not correct since the appellant was manufacturing intermediate goods and were not rendering any service. The same activity cannot be both a manufacture (which falls under the Central Excise Act) and service (which falls under Chapter V of the Finance Act, 1994). The goods manufactured and removed under exemption Notification No. 214/86-CE dated 25.03.1986 are not exempted goods, but only goods where the payment of duty is deferred. Therefore, they were manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture and knowing that the appellant was claiming the exemption notification from Excise duty, Revenue cannot at the same time take a stand that the processes amount to rendering a service and that such service was an exempted service. If Revenue was of the opinion that it s original position was not correct and no manufacture was involved at all in the process undertaken by the appellant it should have brought out cogent reasons for holding so. Therefore, there is no basis for the allegation in the show cause notice that the appellant was rendering an exemption service when it was manufacturing dutiable goods. 11. Further, we find that the demand has been made under Rule 6 (3) of CCR, 2004. It has been held by the Hon ble High Court of Andhra Pradesh and Telangana in the case of Tiara Advertising versus Union of India [2019 (30) G.S.T.L. 474 (Telangana)] that the various options under Rule 6 are options given to the assessee and the Revenue cannot choose one of the options and force it upon the assessee. Even if the assessee is rendering exempted services or manufacturing exempted goods and using common input services no demand can be sustained under Rule 6 (3) as this is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -in-Original however reflects that the second respondent did not even advert to the case law cited before him. 14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options to an output service provider who does not maintain separate accounts in relation to receipt, consumption and inventory of inputs/input services used for provision of output services which are chargeable to duty/tax as well as exempted services. If such options are not exercised by the service provider, the provision does not contemplate that the Service Tax authorities can choose one of the options on behalf of the service provider. As rightly pointed out by Sri S. Ravi, Learned Senior Counsel, if the petitioner did not abide by the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004, it was open to the authorities to reject its claim as regards the disputed Cenvat Credit of Rs. 17,15,489/-. 15. We may also note that in the event the petitioner was found to have availed Cenvat Credit wrongly, Rule 14 of the Cenvat Credit Rules, 2004 empowered the authorities to recover such credit which had been taken or utilised wrongly along with interest. However, the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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