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TMI Blog2022 (9) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... ey utilized such credit towards payment of duty on their final product. On scrutiny of records relating to production, clearances and cenvat credit account during Audit under EA-2000 by the Central Excise Officers, it was noticed that they have taken cenvat credit of service tax paid on the input services, viz, GTA Service (carriage inward), Customs House Agent Service, Telephone Service, ISO Certification Service etc. and utilized such credit towards payment of duty on their final product during the period from July, 2010 to March, 2014. It is the case of the Department that the input services have been used in or in relation to the manufacture of the said dutiable final products as well as exempted goods during the period under dispute. It was noticed that separate accounts had not been maintained for receipt and use of common input services in respect of dutiable final products as well as exempted goods. 2.2 Based on the above allegation, Show-cause Notice dated 29.07.2015 was issued proposing recovery of amount of Rs.15,70,918/- payable on 4,04,600 Kgs. of exempted goods valued at Rs.2,87,56,310/- cleared from the factory during the period from July, 2010 to March, 2014 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the observations and findings of the adjudicating authority. 3.3 The Ld.Advocate further submitted that the Ld. Commissioner (Appeals) has observed that the provisions of Rule 6(3)(ii) of Cenvat Credit Rules, 2004 provided option to pay an amount as determined under Rule 6(3A) ibid and the Appellant has not followed the conditions and procedures regarding maintenance of separate accounts of the input services used in exempted goods/dutiable goods. In that case, the only option available to the Appellant was to pay duty at the rate prescribed under Rule 6(3)(i) of Cenvat Credit Rules, 2004 @ 5% or 6% as applicable from time to time from the value of the exempted goods. It is the submission of the Ld. Advocate that such observations of the Ld.Commissioner (Appeals) is clearly against the law settled by decisions holding that non-compliance of the procedure of Rule 6(3A) of Cenvat Credit Rules, 2004 is a procedural lapse and if the assessee has not exercised his option, it is not open to the Department to exercise the option on behalf of the assessee. 3.4 In support of his submissions, he relied upon the various decisions of the Tribunal, the Hon'ble High Courts and the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the common input services used for manufacture of dutiable final products as well as exempted goods is mandatorily required to pay an amount equal to 5% (effective up to 16.03.2012) and 6% (w.e.f.17.03.2012) of the value of exempted goods. 7. I find that the aforesaid issue is no more res integra and has been considered in a catena of judgments. In the present case, the Appellant has reversed the credit attributable to the common input services used in or in relation to the manufacture of exempted goods. 8. I find that this Tribunal in the case of Philips Carbon Black Limited [Final Order No.FO/76973-76975/2019 dt.17.12.2019] had held that non-compliance of the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules, 2004 does not result in loss of substantive right of the assessee to avail the option of reversing proportional credit and such non-compliance is at best a procedural lapse, which can be condoned. 9. Further, I find that the Hon'ble Supreme Court in the case of Chandrapur Magnet Wires [1996 (81) ELT 3 (SC)] has held that reversal of credit along with interest amounts to a situation, which is akin to as if the assessee had never availed such credit at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the adjudicating authority could have mechanically applied the 6% rule on the assessee, was considered in the case of Tiara Advertising vs. Union of India and it was held as follows: "14. Further, we may reiterate that Rule 6(3) of the Cenvat Credit Rules, 2004, merely offers options toan 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 does not abide by the provisions of Rule6(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/-." 13. As pointed out in the aforementioned decision, if according to the adjudicating authority, the assessee did 2019 (30) G.S.T.L. 474 (Telangana) CEXA/11/2022 not abide by the provisions of Rule6(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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