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TMI Blog2024 (5) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on a calculation/ formula prescribed therein and to finally pay difference in reversal after completion of annual calculation by 30th June of the succeeding year. The appellant submitted the certificates issued by Chartered Accountant(CA) to prove that they have maintained separate accounts. However, adjudication authority has not considered the certificates issued by CA, since it does not report that it is maintained from receipt stage and also do not state that they are in conformity with the statutory provisions viz., Rule 6 of CCR, 2004. On a combined reading of the report of Range officer, findings of the Adjudication authority as stated above and considering the report of Chartered Accountant(CA), which categorically certified that the appellant is maintaining separate records and have been making reversal of balance amounts at end of every month, the appellant has complied with the provisions of rule 6 of CCR, 2004 and hence findings in the impugned orders are not sustainable. However, it is found that there is an amount of 29,24,565/- which remains to be reversed by them. Thus, this amount is required to be reversed along with interest. Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant and after considering the detailed report furnished by the Range Officer, Adjudicating authority dropped the proceedings proposed against the Appellant in Show Cause Notice No. 164/2012-ST dated 18.11.2012 for the period 01.04.2011 to 31.03.2012. Aggrieved by the said order, Revenue filed Appeal No. ST 21676/2014. 4. The Appeal No. ST/1252/201-DB, ST/1721/2011, ST/1700/2012, ST/3466/2012 and the appeal No. ST/21676/2014 filed by the Revenue came up for hearing before this Tribunal. As per Final Order No. 21353 to 21357/2018, the appeals filed by the Appellant were allowed by this Tribunal and appeal filed by the Revenue was rejected. Aggrieved by the said order, Revenue filed appeals before the Hon'ble High Court of Kerala. Hon'ble High Court of Kerala considered the issue in detail and vide judgment dated 22.08.2022 in CE appeal No. 4/2019 filed by the Revenue was dismissed with the following observation: "For the assessment year 01.04.2011 to 31.03.2012, the Commissioner while seized of the matter sought a clarification from the jurisdictional Range Officer regarding the practice followed by the assessee availing CENVAT Credit and it is on the basis of the said repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant. As directed by this Tribunal, Learned AR submitted a report on 24.03.2023. However, there was no specific mention as regards to verification of the documents. Considering the same, this Tribunal directed the Learned Counsel for the appellant to produce documentary evidence including invoices, CENVAT credit availed, etc., for a particular month on sample basis and to produce the same before the Range Officer and to report after verification. Thereafter, when the matter came up for hearing on 01.11.2023, Learned AR, produced the compilation of the records prepared with the assistance of Range Officer and the concerned Chartered Accountant of the appellant. However, these documents were not authenticated by the Revenue and to ascertain the evidentiary value of the document produced before this Tribunal, summons were issued as directed by the Hon'ble High Court of Kerala to the Range Officer Shri Rajiv. Thereafter on 17.11.2023, the concerned Range Officer and the Finance Officer of the appellant appeared before this Tribunal. The Range Officer Shri Rajiv has given a deposition before this Tribunal that the report is prepared after verifying the records and accounts ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and detail accounts are maintained regarding the common amenities used by the appellant. It is fairly admitted that the accounting practice followed by the appellant as regards expenses like telephone charges, bank charges, printing and stationery, etc., where it is not possible to maintain accounts separately, proportionally credit was availed and was reversed on the principle of proportionate reversal of CENVAT credit on monthly basis. At the end of the year, they calculate final credit based on the current year's actual turnover figures and make the adjustments. Learned Counsel further submits that the entire accounts maintained by appellant were submitted to the department for verification and after conducting verification of a random sample as directed by this Tribunal, Range officer admits that the Appellant is maintaining the accounts in their computer system for their various divisions and the accounts maintained by the appellant are in line with those required to be maintained under Rule 6(2) of CCR,2004. 10. Learned Counsel also drew our attention to the final order in the matter of M/S. Tirupati Commodities Vs. Commissioner of Central Goods & Service Tax, Jaipur ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to maintain separate accounts. Rule 6(3A) provides for a procedure for calculating proportionate credit admissible to an assessee. A service provider can avail the entire credit of input services and at the end of every month reverse a provisional amount of credit based on the preceding financial year's turnover for different services, but at the end of the year, the service provider is required to calculate final credit based on the current year's actual turnover figures and make the adjustments. What transpires, therefore, is that in terms of rule 6(3A), a provider of output service can take only proportionate credit that is attributable to the taxable service. 17. The dispute in the appeal is regarding the interpretation of the term total CENVAT credit provided in the formula in rule 6 (3A)(b)(ii). According to the Department, the total CENVAT credit should include even those services used exclusively in taxable services, including the common service while according to the appellant it should include only common input services and services used in exempted services and not the services used exclusively in rendering taxable output service. 12. Learned Counsel further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period 04/2010 to 03/2011. Learned AR drew our attention to change of definition of Rule 6(3) w.e.f. 01.04.2008 and submits that out of the present appeals, 3(three) appeals are prior to 01.04.2008 and appeal No. 1-5 of 2010 relates to period after 2008. Learned AR also drew our attention to the finding given by the adjudication authority and submits that the availing and utilisation of input credit for taxable and exempt service are to be as per Rule 6 of CENVAT Credit Rules, 2004 and only due to non-compliance of the above, adjudication authority has rightly confirmed the demand of credit. Learned AR also drew our attention to Final Order No. 40084/2023 dated 27.02.2023 and submits that it is an accepted legal principle that the person, who desires to avail benefits of any provisions of an Act/Rules, has to follow the procedures/conditions stipulated therein, scrupulously. As regards, whether the sub-rules under Rule 6 of CCR, 2004 are mandatory or directory, Learned AR relied on the judgement of Hon'ble High Court of Bombay in the matter of CC Vs. Nicholas Piramal (India) Ltd.- 2009 (224) ELT 321 (Bom) where it is held that : - "25. The next submission advanced on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved to his satisfaction that the payment of the tax has been duly made and in time, in this sense, the rule can be regarded as directory since it lays down one of those modes which will be unquestioned for its validity. The other modes of proof are not necessarily shut out. It is to be remembered that all rules of procedure are intended to advance justice and not to defeat it." 27. In the light of the above discussion, in our opinion, it is not possible to accept the contention as advanced on behalf of the assessee that the said rule can be read differently. The assessee's submission has been that he gives up the credit which he had taken before the goods leave the factory premises. That amounts to compliance with Rule 6(1). The language of Rule 6(1) is not to grant credit to an assessee except in circumstances mentioned in sub-rule (2). We have therefore no hesitation in rejecting the said contention. It will not be possible in that context to read the rule as directory as sought to be contended on behalf of the assessee. The rule would have to be followed. In other words, it is mandatory, if an assessee seeks to avail of Cenvat Credit as set out in the rule." 14. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince it does not report that it is maintained from receipt stage and also do not state that they are in conformity with the statutory provisions viz., Rule 6 of CCR, 2004. 18. In respect of 5(five) Show Cause Notice issued to the appellant, the adjudication authority itself called for the evidences from the concerned Range Officer and dropped the proceedings against the appellant for the period from 01.04.2011 to 31.03.2012 with a finding that "As regards maintenance of separate accounts, the Assessee stated that they have selected and chosen a particular option which in their case is of maintaining separate accounts in terms of Rule 6 (2) of CCR, that, the question of intimation to the Superintendent of Central Excise does not arise as they have clearly indicated in the periodical ST-3 Returns that they have maintained separate accounts; that the allegation that they have not maintained separate accounts is not correct and the Show Cause Notice is unsustainable on that ground and relied on decisions of Appellate authorities". 19. Aggrieved by said order, appeal was filed by the Revenue before this Tribunal and it was dismissed. Aggrieved by the same, appeal was filed by Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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