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TMI Blog2024 (6) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... d the entire credit of Rs.6,14,107/- along with interest of Rs.1,33,720/- on 27.11.2010 - in several cases, the Tribunals and High Courts have been consistently holding that for mere taking of a few thousands worth of Cenvat Credit, the assessee should not be burdened with 6% / 8% of the value of the exempted goods for recovery of the Cenvat Credit. Amendment carried out to Rule 6 of Cenvat Credit Rules 2004 by insertion of Rule 6 (3AA), clarifies the legislative intent to recover only the proportionate cenvat credit and not 6 % / 8% even when the assessee fails to opt for proportionate reversal at the initial stages even though the option was not exercised earlier. In cases, where the entire cenvat credit taken is reversed, the assesse would be in a much better footing - thus the appeal allowed on merits. Extended period of limitation - HELD THAT:- There are sufficient force in the Appellant s submission that no case has been made out by the Revenue on account of suppression on the part of the Appellant. The cenvat credit taken by them have been reflected in the ER 1 Returns filed by them. As is clarified by the Certificate issued by the Chartered Accountant, during the first two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke in case of the services provided by the decorator, the Cenvat Credit was taken during two financial years, which was fully reversed by them on being pointed out. However, the Adjudicating Authority in the Order-in-Original has also held that they have taken the Cenvat Credit for the invoices issued for Orient Decorators wherein no reversal was made by the Appellant. On this ground he has confirmed the demand. The Ld.Counsel submits that the fact that they had taken credit on the invoices issued by Orient Decorator was not raised in the Show Cause Notice itself. Therefore, by taking up this issue while passing the Order In Original to confirm the demand, the Adjudicating Authority has traversed beyond the scope of the Show Cause Notice. The Ld.Advocate submits that even on this count, the impugned order is liable to be set aside. 4. The Ld. Counsel submits copy of the Certificate dated 29.05.2014 issued by the Chartered Accountant wherein it is clearly stated that the Appellant did not take any credit for the services rendered by R.D. Enterprises and Orient Decorators during the period 2006-07 and 2007- 08. Only during 2008-09 and 2009-10, the Appellants have taken the credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Page 6 of the Show Cause Notice. As pointed out by the Ld.Counsel, there is no reference to the services provided by Orient Decorators in the Show Cause Notice. The Adjudicating Authority in the Order-in-Original has held as under:- .. It is also found from documentary evidences that till date they have not paid the entire amount of input service tax credit used exclusively for providing such output services as the credits taken on the invoices issued by M/s. Orient Decorators are not paid back till date. When conditions of the exemption has not fulfilled by the service provider, they are not eligible for avail the benefit. This would amount to travelling beyond the scope of Show Cause Notice. 10. From the Chartered Accountant s Certificate dated 29.05.2014 along with its Annexure it can be seen that the Appellants were careful and they had not taken the credit for Service Tax charged by these decorators during the period 2006-07 and 2007-08. Therefore, their taking of the credit on proportionate basis in 2008-09 and 2009-10 can be taken as a matter of inadvertent error and by way of erroneous interpretation of the provisions. As a matter of fact, there is no provision to take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to the ratio of the decision of the Supreme Court in the case of Chandrapur Magnet Wire (supra). 24 . In fact the decision of the five Member Larger Bench of the Tribunal in Franco Italian Company (supra) was followed by three Member Bench of the Appellate Tribunal in the case of ICON Pharma and Surgical (P) Ltd., 2000 (40) RLT 918. 25 . The Tribunal again in a three Member Bench decision in the case of Tube Investment of India, Final Order No. 795/2002, wherein the specific issue was whether the reversal of credit subsequent to removal of goods, was fatal to the extension of benefits of the notification considered the matter at length. The majority decision upheld the argument of the assessee therein and held that reversal of credit subsequent to the clearance of exempted product is in line with the ratio of the Supreme Court judgment laid down in Chandrapur Magnet Wires Co. (supra). 28. The Tribunal in the case of Kitply Industries Limited Eastern Bench at Calcutta,2001 (130) E.L.T. 236 has again held that reversal of credit would amount to no credit being taken. Hence the assessee was entitled to the benefit of notification . The Appellate Tribunal followed the decision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of final products on which duty will have to be paid and in view of this clarification by the Department, the Court saw no reason that why the assessee should not make a debit entry in the credit account before removal of the exempted final product and hence, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. The Court, therefore, took the view that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken the credit of the duty paid in the inputs used in manufacture of these goods . The ratio laid down in this decision is squarely applicable to the facts of the present case and maintenance of separate books of accounts at the initial stage cannot be considered to be a condition precedent for the purpose of claiming the benefit of exemption to the respondent-assessee. This issue had come up for consideration before the Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India, reported in 2004 (174) E.L.T. 422 (All.), wherein it is held that reversal of Modvat credit amounts to no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of clause (c) of sub-rule (3A), with interest calculated at the rate of fifteen per cent. per annum from the due date for payment of amount for each of the month, till the date of payment thereof. 16. This amendment clarifies the legislative intent to recover only the proportionate cenvat credit and not 6 % / 8% even when the assessee fails to opt for proportionate reversal at the initial stages even though the option was not exercised earlier. In cases, where the entire cenvat credit taken is reversed, the assesse would be in a much better footing, particularly in view of the High Court decisions cited supra. 17. In the present case, the ratio laid down by the judgments are squarely applicable. Therefore, we allow the Appeal on merits. 18. We also find sufficient force in the Appellant s submission that no case has been made out by the Revenue on account of suppression on the part of the Appellant. The cenvat credit taken by them have been reflected in the ER 1 Returns filed by them. As is clarified by the Certificate issued by the Chartered Accountant, during the first two years no Cenvat Credit was taken whereas during the next two years they have taken proportionate Cenvat Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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