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TMI Blog2023 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the provisions of the said Rule which should be as on the date of exercising the option. Hence a harmonious reading of Rule 6(3)(ii) and Rule 6(3A) of CCR, 2004 leads to the conclusion that the intimation given to the department is effective only prospectively. It must be stated that, Rules made under the Statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act and are to be, judicially noticed for all purposes of construction or obligation. The service provider has to calculate and pay, provisionally, for every month, the amount attributable to exempted services, as per the formula given under Rule 6(3A)(b) of CCR, 2004. This is not an empty formality to term the provision as procedural. Credit taken into their books by assessee s are as good as liquid cash for the purpose of payment of duty and requires a system of checks and balances to ensure their proper and lawful utilization as per the scheme of the Act and Rules. Allowing every assessee the freedom to make the declaration whenever he chooses, even retrospectively after the statutory monthly returns are filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred upon it by law cannot be made dependent upon the question whether its decision is correct or erroneous. For, that would create an impossible situation - the appellant after receipt of orders from the department relating to erroneous credit taken by them as per Rule 6 of CCR 2004, cannot continue to plead ambiguity in the interpretation of the said provision and claim that having reversed wrongly taken credits, that too as per their interpretation of the Rule, the imposition of interest and penalty is unsustainable. Their plea in this regard also fails. Appeal dismissed. - Service Tax Appeal No.689 of 2012 - Final Order No. 40084/2023 - Dated:- 27-2-2023 - Shri P. Dinesha, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) Ms. Krithika Jaganathan, Advocate for the Appellant Ms. K. Komathi, ADC (AR) for the Respondent ORDER This present appeal has been filed by M/s. Sify Technologies Ltd. (STL) against Order in Original No. LTUC/296/2012-C dated 11.9.2012 passed by the Commissioner, LTU, Chennai. 2. The facts of the present appeal are that, STL was merged with M/s. Sify Communications Ltd. (SFL) in pursuance of order dated 7.7.2009 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That by reversing Rs.10,58,545/- for the period from 1.4.2008 to 31.3.2010, the appellants have complied with the rigors of Rule 6(3A) of CENVAT Credit Rules, 2004 and denial of entire credit availed by them is unjust. Reversal of CENVAT credit tantamount to non-availment of input service credit on common inputs and hence imposition of interest and penalty is unsustainable. Hence he prayed that the appeal may be allowed with consequential relief. 5. The Learned Counsel for the appellant has referred to the following judgments in support of their views, that no time limit has been provided for an assessee to exercise option under Rule 6; that delay in giving intimation can be taken at most as a procedural lapse as the conditions for filing declaration are not mandatory; that the obligation under Rule 6 are in the form of various alternatives and the assessee is free to choose any option; that once proportionate credit of input services used in exempted output services has been reversed, it tantamounts to not availing of credit of common inputs. :- (a) Nava Bharat Ventures Limited Vs. CCE ST Hyderabad reported in 2021 (11) TMI 426 CESTAT Hyderabad (b) Mercedes Benz India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought any clarification if they had any doubt in this regard. She has also drawn our attention to the decision of this Tribunal in the appellant s own case Sify Technologies Ltd. Vs. Commissioner of Service Tax, LTU, Chennai vide Final Order No. 42327/2018 dated 30.8.2018 reported in 2019 (370) ELT 977 (Tri. Chennai) wherein the Tribunal has held that they cannot opt for Rule 6(2) and 6(3) of CENVAT Credit Rules, 2004 concurrently. Such procedure is against basic principles of Rules and is legally barred under sub-rule (1). 7. Based on the issues involved, we take up the following points for consideration:- 1) Whether Rule 6 stipulates any time period within which the assessee must inform the department about exercising the option under Rule 6(3) of CCR. 2) Whether non-intimation of option under Rule 6(3) is at best a procedural lapse for which substantial benefit ought not to be denied. 3) Whether as per the Statute the option filed by the appellant under Rule 6(3)(ii) of CCR, 2004 is effective only prospectively. 4) Whether the option under Rule 6(2) of CENVAT Credit Rules, 2004, for credit of inputs used for payment of duty on taxable services and Rule 6(3) for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars as detailed thereunder. It also requires him to inform the date from which the option under clause (ii) of sub-rule 3 is exercised or proposed to be exercised. Sub-rule (3)(v) requires him to intimate the CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under the said condition. Hence the time by which the assessee must inform the department about exercising the option is on the date of exercising the option. He can intimate the date on which he proposes to avail the option in advance also. 9. The sequence of Rule 6 and the procedure and conditions stated therein, clearly bring out that the assessee can only avail the facility under Rule 6 after following the provisions of the said Rule which should be as on the date of exercising the option. Hence a harmonious reading of Rule 6(3)(ii) and Rule 6(3A) of CCR, 2004 leads to the conclusion that the intimation given to the department is effective only prospectively. It must be stated that, Rules made under the Statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Hon ble Supreme Court in CCE v. Gujarat Narmada Fertilizers Co. Ltd. 2009 (240) E.L.T. 661 (S.C.) held that sub-rule (1) of Rule 6 is plenary. It restates a principle, namely, that Cenvat credit of duty paid on inputs used in the manufacture of exempted final product is not allowable. This principle is inbuilt in the very structure of the Cenvat scheme. Sub-rule (1), therefore, merely highlights that principle. Sub-rule (1) covers all inputs, including fuel, whereas sub-rule (2) refers to non-fuel inputs. Sub-rule (2) as well as (3) put in place the mechanism to comply with the mandate of sub-rule (1) in the case of a manufacturer/provider of an output service availing Cenvat Credit, but manufactures/provides output services which are both chargeable to duty as well as exempted. Sub-rule (2) requires the manufacturer/provider of output service to maintain separate accounts for inputs/input services which are used for manufacture of dutiable goods/providing taxable service as well as those which are used towards the exempted goods/services. In terms of the sub-rule (2), the assessee is allowed to take Cenvat Credit only in respect of inputs/input services used towards dutiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides for a situation when a manufacturer/service provider who is using common inputs for dutiable and exempted products is not able to maintain separate accounts. Though the sub-rule uses the words opting not to maintain separate accounts , in fact, the same has to be construed to mean a situation when he is not able to maintain separate accounts for e.g.:- due to the complex process of manufacture or complex stream of use of such inputs/input services. There is no compulsion on the manufacturer/service provider to maintain separate accounts, and the manufacturer/output service provider can opt not to maintain separate accounts by following sub-rule (3). Thus sub-rule (2) takes care of manufacturer/service provider who can maintain separate accounts for common inputs/input services and sub-rule (3) takes care of manufacturer/service provider who is not able to maintain separate accounts. However, the options are left open to both categories by the use of non-obstante clause in sub-rule (3). In other words, it cannot be said that for certain common input services, the assessee can maintain separate account under sub-rule (2) and in respect of others, he need not maintain such acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants maintained separate accounts for common input services and availed credits under sub-rule (2) of Rule 6, then there is no question of another option for common input services under sub-rule (3) of Rule 6. From the above judgment, it is very clear that an assessee cannot avail of the options under Rule 6(2) and 6(3) simultaneously. The obligations under Rule 6 are in the form of various alternatives and the assessee is free to choose any option. The assessee is under no compulsion to choose one option over the other. But once having chosen a particular option he cannot avail of the other option simultaneously. Hence this question is also answered in favour of the decision of the Lower Authority in the impugned order. 11. The final question relates to whether interest or penalty are liable to be demanded from the assessee, as proportional reversal of credit has been done by them. As discussed above the provisions of Rule 6 are very clear and without any ambiguity. The appellant has been suo moto taking credits even after the issue of previous show cause notices. In a few cases relating to Rule 6 of CCR 2004, orders have also been passed by the department deciding the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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