Case Law Details
Steel Authority of India Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
Conclusion: Since assessee had exercised option in terms of Rule 6(3)(ii) of the Cenvat Credit Rules and once this fact was established from the materials on record, there could be no demand in terms of Rule 6(3)(i) of the Cenvat Credit Rules and also nowhere it was mentioned that an assessee should pay any amount higher than that of the actual amount calculated under the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules.
Held: Assessee-company after coming into force of the provisions of substituted Rule 6(3) and the newly inserted Rule 6(3A) in the Cenvat Credit Rules with effect from April 1, 2008, exercised option in terms of Rule 6(3)(ii) of the Cenvat Credit Rules and reversed cenvat credits on all common inputs used in or in relation to the manufacture of dutiable products and exempted goods, including ammonium sulphate, and paid, by way of reversal, cenvat credit attributable to inputs in or in relation to the manufacture of exempted goods, including ammonium sulphate and CO gas, in terms of Rule 6(3A) of the Cenvat Credit Rules, from the financial year 2008-09 onwards. A show-cause notice was issued by the Additional Commissioner, alleging that assessee-company had manufactured and cleared an exempted product which had been manufactured using different common cenvatable inputs and input services but without maintaining separate accounts as required under Rule 6(2) of the Cenvat Credit Rules and without payment of amounts as required under Rule 6(3)(i) of the Cenvat Credit Rules and called upon assessee to show cause as to why 5% of the value of the said goods, should not be demanded and recovered from assessee, along with interest, for the period August 2010 to March 2011 and why penalty should not be imposed upon assessee. The issue arose for consideration was whether demand in terms of Rule 6(3)(i) of the Cenvat Credit Rules was appropriate as assessee availed cenvat credit on common inputs which were used in or in relation to, either directly or indirectly in the manufacture and clearance of dutiable final products as well as exempted final products, namely ammonium sulphate and CO gas, where assessee had exercised option to follow Rule 6(3)(ii) of the Cenvat Credit Rules in terms of Rule 6(3A) and whether non-acceptance thereof by the Department was correct? It was held that there was no dispute nor denial in either the show cause notices or in the adjudication orders that assessee had exercised option in terms of Rule 6(3)(ii) of the Cenvat Credit Rules. Once this fact, established from the materials on record, was not disputed, there could be no demand in terms of Rule 6(3)(i) of the Cenvat Credit Rules. The finding that assessee was required to pay much higher amount in terms of Rule 6(3) of the Cenvat Credit Rules other than that actual reversed was also without any merit. On plain reading of Rules 6(3) and (3A) it was seen that nowhere it was mentioned that an assessee should pay any amount higher than that of the actual amount calculated under the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules. The finding that the reversal of credit attributable to the inputs used in the manufacture of exempted products was insufficient in accordance to the demanded amount as calculated in the show cause notices was misconceived. The relevant provisions and procedure nowhere required that an assessee should pay an amount higher than that of the actual amount calculated under the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The two appeals are against the orders dated February 28, 2018 and March 5, 2018 both passed by the Commissioner of Central Tax (Appeals), Kolkata whereby the appeals filed by the appellant against the adjudication orders dated November 8, 2012 and December 18, 2012 both passed by the Additional Commissioner, Central Excise & Service Tax Commissionerate, Bolpur confirming demands of Rs. 11,79,415/- and Rs. 26,94,800/- respectively against the appellant, under Rule 14 of the Cenvat Credit Rules, 2004 (hereinafter referred to as the “Cenvat Credit Rules”) and Explanation II of Rule 6(3)(b) of the Cenvat Credit Rules, along with interest thereon under Rule 14 of the Cenvat Credit Rules read with Section 11AB of the Central Excise Act, 1944 (hereinafter referred to as “the Act”) and imposing equivalent amount of penalties upon the appellant under Rule 15(2) of the Cenvat Credit Rules, have been rejected. The periods involved in the instant appeals are from August 2010 to February 2011 and August 2010 to March 2011.
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