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TMI Blog2024 (7) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 35G of the Central Excise Act, 1944, the appellant-Revenue has proposed the following substantial questions of law arising out of the Judgment and Order dated 08.06.2023 passed by the Customs, Central Excise and Service Tax Appellate Tribunal, Western Zonal Bench, Ahmedabad (for short 'the CESTAT') in Excise Appeal No. 11050 of 2013-DB which was filed by the respondent being aggrieved by the Order-in-Original/Appeal No. 11-12-COMMR-SURAT-II-2013 dated 29.01.2023 passed by the Commissioner of Central Excise, Customs (Adjudication)-Surat-II : "(a) Whether the Hon'ble CESTAT, is correct in holding that if the assessee reversed/paid proportionate Cenvat credit in respect of common input service used in the manufacture of exempted good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing Cenvat Credit under the Cenvat Credit Rules, 2004 (for short 'the Rules') on Central Excise Duty paid on inputs, capital goods and input services. 3.3. A show-cause notice was issued on 22nd September, 2009 calling upon the respondent-assessee as to why :- "(i) Central Excise duty amounting to Rs. 2,98,15,482/- should not be recovered from them under Rule 14 of Cenvat credit Rules, 2004 read with Rule 6 (b) of Cenvat Credit Rules, 2004 read with proviso to Section 11A of Central Excise Act, 1944: (ii) Interest at appropriate rate should not be recovered from them under Rule 14 of Cenvat credit Rules, 2004 and or proviso to Section 11AB of Central Excise Act, 1944, on the duty so evaded amounting to Rs. Rs. 2,98,15,4821- (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of such exempted goods. The respondent therefore to avoid the litigation, paid the entire amount of cenvat credit of Rs. 2,51,134/- vide S.T. Credit register entry No. 011 dated 01.10.2010 attributable to the input services used in the manufacture of the said product and also paid interest at the rate of 24% of Rs. 2,38,074/- vide PLA Entry No. 07 dated 01.10.2010. 3.7. The adjudicating authority, however, accepted the amount attributable of Rs. 1,71,95,948/- as demanded in SCN dated 22.09.2009 as far as clearance pertaining to period from September, 2004 to March, 2008 but for the period from April, 2008 to June, 2009, the adjudicating authority held that the respondent was liable to pay 10% amount of value of clearances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant in use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (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 either of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under : "7. We find that the case of the department is that since the assessee has availed the Cenvat credit in respect of common input service used in the manufacture of dutiable and exempted goods, the appellant is required to pay 10% of the value of the goods cleared without payment of duty (exempted goods). From the facts it is undisputed that the appellant have been reversing Cenvat credit proportionate to the credit on input service used for exempted goods along with interest, therefore, first the credit though availed at the time of receipt of input service but after reversal thereof along with interest the position is as if credit was not availed. We are also of the view that Rule 6 of the Cenvat Credit Rules is not enacted to ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice but after reversal thereof along with the interest, the respondent never availed the credit. 5. Therefore, as per option given by Rule 6 (3) of the Rules which has come into effect from 01.04.2008, the appellant could not have insisted upon the payment of 10% amount of the value of the exempted goods when the petitioner has opted for the reversal of the Cenvat Credit on the input goods and services used for the exempted goods along with the interest. Merely because the respondent has reversed such credit in the year 2010, the appellant-Revenue cannot insist upon payment of 10% amount of the value of the exempted goods coupled with the facts that the respondent has paid interest at the rate of 24% per annum on the amount of reversal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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