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TMI Blog2023 (10) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... t opted, then only option of payment of 5% provided under Rule 6(3)(i) shall be compulsorily made applicable, therefore we are of the view that Revenue could not insist the appellant to avail a particular option. In the present case admittedly it is appellant who have on their own opted for option provided under Rule 6(3)(ii). Thus, it is clear that exercise of option vests entirely with assessee at any stage and proceedings under rule 14 of CENVAT Credit Rules, 2004 would have to be restricted to that which is least detrimental to the assessee. The demand based on the harshest of the options as ordered by the original authority does not sustain. However, in having taken that extreme step, the claim of the appellant that obligation contemplated in the scheme has been duly complied with was not ascertained. The discharge of the obligation must be in consonance with the computation envisaged in rule 6 of CENVAT Credit Rules, 2004. The matter remanded back to the original authority who shall limit proceedings under rule 14 and rule 15 of CENVAT Credit Rules, 2004, if any, only to deficit, if any, in compliance as set out - impugned order set aside. X X X X Extracts X X X X X X X X Extracts X X X X ..... was incorporated as sub-rule (3) therein. 3. The stand of the appellant is that fulfillment, even belatedly and as set out supra, of the admitted obligation to neutralise ineligible credit, along with interest thereon, relieved them of higher detriment entailed to the other options in rule 6(3) of CENVAT Credit Rules, 2004 which the adjudicating authority held to be nothing but advance remittance towards the default option therein. The impugned options find place as 'Rule 6. Obligation of a manufacturer or producer of final products and a provider of taxable service - xxxx (3) Notwithstanding anything contained in sub-rules (1) and. (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow any one of the following options, as applicable to him, namely :- (i) pay an amount equal to five per cent of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in clause (a) of sub-rule (2), take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules, 2004 well before the issue of show cause notices and intimated to jurisdictional central excise authorities in communication dated 24th August 2012 for desisting from initiating proceedings for recovery under rule 14 of CENVAT Credit Rules, 2004. Thus, with the incorporation of 'Explanation .- For the removal of doubts, it is hereby clarified that "exempted services" includes trading;' below '(e) '"exempted services" means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act, and taxable services whose pat of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken.' of rule 2 of CENVAT Credit Rules, 2004 with effect from 1st April 2011, by notification no. 3/2011-CE(NT) dated 1st March 2011 rendering 'trading' to be ineligible for absorption of credit of tax paid on 'input service', and indeed there is no dispute on ineligibility of appellant, the obligation to reverse such credit crystallised. 5. Learned Counsel for appellant submits that the machinery pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be exercised only by the assessee. Furthermore, it is also abundantly clear that rule 6 of CENVAT Credit Rules, 2004 merely sets out the scheme of neutralisation and entirely for the assessee to comply with; any failure thereto was to be set right under the authority of rule 14 of CENVAT Credit Rules, 2004. In re Mercedes Benz India (P) Ltd, it was held that '5.1 We have observed that in Rule 6(3) prevalent at the relevant time, two options have been provided :- (i) Payment of 5% on value of exempted services. (ii) Payment of an amount equal to the Cenvat Credit amount attributed to input services used in or in relation to manufacture of exempted goods or provision of exempted services as provided under sub rule (3A)(b). It is observed that the appellant has availed the option provided under sub-rule (3)(ii) of Rule 6 and paid an amount as per sub-rule (3A) along with interest and intimated the same to the jurisdictional superintendent in writing vide letter dated 14-3-2012. From the perusal of the said letter, we observed that the appellant categorically stated in the said letter that payment of Cenvat Credit, which they have made alongwith interest is in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able services; (iv) Description of exempted goods or exempted services; (v) Cenvat credit of inputs and input services lying in balance as on the date of exercising the option under this condition. As per the submission of the appellant and perusal of their letter along with enclosed details, it is found that more or less all these particulars were intimated to the Jurisdictional Superintendent. The appellant has been filing their returns regularly on monthly basis to the department. On perusal of the copies of the such return submitted along with appeal papers, it is observed that the particulars, as required under clause (a) of sub-rule (3A) of Rule 6 has been produced to the range superintendent. Therefore all the particulars which are required to be intimated to the Jurisdictional superintendent while exercising option stand produced. Though these particulars have not been submitted specifically under a particular letter, but since these particulars otherwise by way of return and some of the information under their letters has admittedly been submitted, we are of the view, as regard this compliance of Rule 6(3A), it stood made. 5.3 As regard the contention of the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods.' and of the Hon'ble High Court of Allahabad in re Hello Minerals Water (P) Ltd holding that '16. The appellate Tribunal has disallowed the benefit of Notification No. 15/1994-CE, dated 1-3-1994 (supra) holding that the credit was not reversed by the petitioner prior to clearance/removal of the goods. xxxxx 18. In view of the above decision we are of the opinion that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence the benefit has to be given of the notification granting exemption/rate of duty on the final product since the reversal of the credit on the input was done at the Tribunal's stage. 19. The Tribunal while passing the impugned order dated 1-10-2003 [2004 (163) E.L.T. 55 (Tri. - Del.)] has not referred to the larger Bench decision of the Tribunal and other binding decisions. In Chandrapur Magnet Wire Limited v. Collector Central Excise, 1996 (81) E.L.T. 3 the Supreme Court has held :- "If debit entry is permissible to be made, the credit entry for duties paid on the inputs utilised in manufacture of final exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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