The Tax Publishers2020 TaxPub(EX) 102

CENVAT CREDIT RULES, 2004

Rule 6(3)

If assessee reversed Cenvat credit in respect of common input service used in the manufacture of dutiable and exempted goods the demand equal to 10%/ 5% would not sustain. Thus, once assessee have opted reversal of credit in respect of service attributed to exempted goods and in case of delay, interest was also paid then demand of 5% / 10% under rule 6(3) could not be made.

Cenvat credit - Common input services - Insurance Service, Telephone Service and Audit Charges etc. -

Assessee was engaged in mining of Bauxite from the mines and availed Cenvat credit on various common input service such as Insurance Service, Telephone Service, Audit Charges etc. These services are used for mining as well as manufacturing process carried at factory. Accordingly, SCN was issued to assessee alleging that Low Grade Bauxite is an exempted product under Notification No. 4/2006-CE. Since assessee had availed cenvat credit in respect of common input service which were used for both dutiable and exempted product assessee was required to pay an amount @ 10%/ 5% of the value of exempted goods in terms of rules 6(3). Held: It was undisputed that assessee have been reversing Cenvat credit proportionate to the credit on input service used for exempted goods along with interest, therefore, first credit though availed at time of receipt of input service but after reversal thereof along with interest the position is if credit was not availed. This issue has been consistently considered in various judgments wherein it was held that if assessee reversed Cenvat credit in respect of common input service used in the manufacture of dutiable and exempted goods the demand equal to 10%/ 5% would not sustain. Thus, once assessee have opted reversal of the credit in respect of service attributed to the exempted goods and in case of delay, interest was also paid then demand of 5% / 10% under rule 6(3) could not be made.

REFERRED : Hyderabad Industries Ltd. v. UOI 1995 (78) ELT 641 (SC) : 1995 TaxPub(EX) 0690 (SC), Mineral & Metals Trading Corporation of India v. Union of India & Ors. 1983 (13) ELT 1542 (SC) : 1983 TaxPub(EX) 0305 (SC), The Commissioner of Central Excise, Mumbai v. M/s. IVP Limited 2017 (349) E.L.T. 18 (Bom.), Shree Rama Multi Tech Ltd. v. Union of India 2011 (267) ELT 153 (Guj) : 2011 TaxPub(EX) 604 (Guj), Commissioner of C. Ex. v. Maan Pharmaceuticals Ltd. 2011 (263) ELT 661 (Guj.) : 2011 TaxPub(EX) 161 (Guj), Commissioner of Central Excise v. Ashima Dyecot Ltd. 2008 (12) ARE 701 (Guj) : 2008 TaxPub(EX) 2878 (Guj), Commissioner of Central Excise, Ahmedabad-II v. Maize Products 2009 (234) ELT 431 (Guj.) : 2009 TaxPub(EX) 0350 (Guj), Hello Minerals Water (P) Ltd. v. Union of India 2004 (174) ELT 422 (All.) : 2004 TaxPub(EX) 2584 (All), Ciron Drugs and Pharmaceuticals (P) Ltd., v. Commissioner of Central Excise [E/86104/2017-SM[BR], dt. 28-12-2017], Sahyadri Starch & Industries (P) Ltd. v. Commissioner of Central Excise [Appeal No. E/220/12, dt. 4-2-2016], M/s. Mercedes Benz India (P) Limited v. Commissioner of Central Excise 2015 TaxPub(ST) 1436 (CESTAT-Mum), Sahni Strips & Wires (P) Ltd. v. Commissioner of C. Ex. 2012 (283) ELT 418 (Tri. Del.) : 2012 TaxPub(EX) 1243 (Del), M/s. S.D. Fine Chem Ltd. & Ors. v. Commissioner of Central Excise 2012 (27) STR 106 (Tri.) : 2012 TaxPub(ST) 0965 (CESTAT-Mum), M/s. Orion Appliances Ltd. v. CST Ahmedabad 2010 (19) STR 205 (Tri. Amd.) : 2010 TaxPub(ST) 0449 (CESTAT-Ahd)

FAVOUR : In assessee's favour by way of remand.

A.Y. :




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