Case Law Details
Pr. Commissioner of CGST and Central Appellant Excise Vs Larsen & Toubro Limited (HED) (Bombay High Court)
Bombay High Court held that even if the assessee has failed to maintain a separate account it was entitled to reverse proportionate Cenvat Credit. The option of paying an amount equal to 10% of the value of exempted goods could not have been enforced on the assessee.
Facts- The controversy in the present appeal revolves around the purport and applicability of Rule 6 of the Cenvat Credit Rules, 2004 under which the duty demand was raised against the respondent. Rule 6 provides for obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services.
It is the Department’s case that the respondent had manufactured dutiable excisable goods as well as exempted goods, consuming common Cenvated inputs and input services as also had maintained separate accounts in respect of raw materials i.e. inputs consumed in excisable and exempted goods, however, it had not maintained separate accounts in respect of input services used / consumed in or in relation to manufacture of excisable and exempted finished goods as required in terms of Rule 6(2) of Cenvat Credit Rules, 2004 as also that the respondent had not followed the procedure specified in sub-rule (3A) of Rule 6 of the CCR 2004.
According to the Department, prior to 1 April 2008 as per the provisions of Rule 6(3) of the CCR,2004 and under Rule 6(3)(i) of the CCR,2004 with effect from 1 April 2008, where the manufacturer or the provider of output services, opts not to maintain separate records for excisable and exempted goods, shall pay an amount equal to 5% (10% prior to 7 July 2009) of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product, charged by the manufacturer for the sale of such goods at the time of their clearance from the factory.
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