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TMI Blog2023 (9) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... MENT OF REVENUE [ 2019 (10) TMI 27 - TELANGANA AND ANDHRA PRADESH HIGH COURT] . The Hon ble High court held the second respondent did not choose to exercise power under this Rule but relied upon Rule 6(3)(i) and made the choice of the option thereunder for the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. Similar view was decided by the Tribunal in the case of M/S NAVA BHARAT VENTURES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS SERVICE TAX, HYDERABAD (VICE-VERSA) [ 2021 (11) TMI 426 - CESTAT HYDERABAD] where it was held that The obligations under Rule 6 are in the form of various alternatives and the assessee is free to choose any option. There is no mechanism either in the CCR or in the Act to enforce any of the options or one of the options on the assessee. If the assessee does not choose any of the options and still avails CENVAT credit, such irregularly availed CENVAT credit can, of course, be recovered under Rule 14 of the CCR. Thus, the demand cannot sustain and requires to be set aside. The issue on merits is decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department that the appellant has to follow Rule 6 (3) (i) of CCR 2004 if they have not maintained separate accounts. Show cause notice was issued to the appellant proposing to demand the amount equivalent to 5% / 10% / 6% value of exempted goods for the disputed period as the appellant had not maintained separate accounts in respect of common inputs used in the manufacture of dutiable and exempted products. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal. 4. Learned counsel Sri S. Durairaj appeared and argued for the appellant. 5. The facts were explained by the learned counsel as under : (i) The allegation against the appellant is that they have taken cenvat credit on common inputs (Sodium Hypo Chloride, Caustic Soda flaks, Caustic soda, Lye, Soda Ash, Hydrochloric Acid, Borax, Phosphoric Acid, Sulphuric Acid, Sulphur etc.) which are used in the manufacture of both dutiable goods (Modified Starch and Native Starch) and exempted products (Native Starch) from 1.2.2008 to 1.2.2010 as well as on exempted product viz. Thippy. The appellant admittedly did not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by Tribunal wherein the demand of duty under Rule 6 (3) (i) and Rule 14 @ 5% /10% / 6% on the value of exempted goods was set aside. It was held by the Tribunal that payment of proportionate credit is sufficient to meet the requirement under Rule 6 (1) of not availing the cenvat credit on inputs / input services used in the manufacture of exempted goods and that no penalty can be imposed. Similar view was taken by the Tribunal in the case of Sunstar Bio Polymers Ltd. Vs CCE Rajkot - 2021 (11) TMI 15 - CESTAT AHMEDABAD. 7. Ld. Counsel has also argued on the ground of limitation. It is submitted that the entire figures were available in the accounts maintained by the appellant. Further, at the time of adjudication the appellant had given details of common input credit availed by them. The adjudicating authority had directed the Range Officer to verify and report about the figures furnished by the appellant. After verification, the Range Officer has submitted the report wherein no deviation has been found in the figures furnished by the appellant. This would show that the appellant has not suppressed any facts from the department. The credit availed on common inputs is only ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 second respondent did not choose to exercise power under this Rule but relied upon Rule 6(3)(i) and made the choice of the option thereunder for the petitioner, viz., to pay 5%/6% of the value of the exempted services. The statutory scheme did not vest the second respondent with the power of making such a choice on behalf of the petitioner. The Order-in-Original, to the extent that it proceeded on these lines, therefore cannot be countenanced." 12. Simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some services from the provisions of Rule 6(1), 6(2) or 6(3), the benefit of this cannot be denied to the assessee. Even otherwise, Revenue does not dispute that some of the common input services in dispute are used to produce electricity, which is further used in manufacture of dutiable products. Unless the services are exclusively used for production of exempted products, they are explicitly covered under Rule 6(5) and the assessee need not reverse proportionate amount of CENVAT Credit on such input services. Show cause notice demanding an amount under Rule 6(3) of the CCR 19. Learned Counsel for the appellant submits that the department demanded under Rule 6(3) an amount equal to 10%/ 8% of the price of exempted goods which is not sustainable. He relies on the judgment of the High Court of Telangana and Andhra Pradesh in Tiara Advertising in which it was held that Rule 6 provides various options for the assessee who produces both dutiable and exempted goods or provides both taxable and non taxable services to choose and one of these is the option to pay an amount equal to 10% or 8% of the value of the exempted goods/ services. The authorities cannot choose an option for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents as to the maintainability of the writ petition is therefore rejected. 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 second respondent did not choose to exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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