Volvola Corporation vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. PKS/62/BEL/2010 dated 31.5.2010 passed by the Commissioner of (Appeals), Central Excise, Mumbai-III )

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : of the Order?

4. Whether Order is to be circulated to the Departmental : authorities?

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Volvola Corporation : Appellant

VS

Commissioner of Central Excise, Mumbai-III : Respondent

Appearance

Shri Amit Salunkhe, Accounts Officer of Appellant

Shri H.M. Dixit, Assistant Commissioner (A.R) for respondent

CORAM:

Mr. Anil Choudhary, Member (Judicial)

Date of hearing : 14/09/2015 Date of decision : 14/09/2015

ORDER NO.

Per : Anil Choudhary

The appellant-assessee is in appeal against Order-in-Appeal dt. 31.5.2010 wherein it has been held that although the appellant had reversed the proportionate input credit on the goods, although, taxable cleared without duty under notification the appellant is liable to pay 10% as required under Rule 6(3) of CCR.

2. The brief facts of the case is that the appellants are engaged in the manufacture of goods industrial valves. The respondent manufactured and cleared the goods valued at Rs.3,45,000/- vide Invoice No.11 dated 19.6.2008 to M/s. R.M.Shah & Co., Ahmedabad, without payment of duty by availing exemption under Notification No. 06/2006 dated 1.3.2006 and reversed Cenvat credit amounting to (Rs.5898+Rs.3308/-) on account of credit on input used in exempted finished goods. The adjudicating authority dropped the demand vide Order-in-Original on the ground that the assessee has maintained a separate account of inputs under Rule 6(2) of Cenvat Credit Rules and there was no need to follow the procedure under sub clause II of sub rule (3) of Rule 6 of Cenvat Credit Rules, 2004.

3. The revenue preferred an appeal before the Commissioner (Appeals), who vide the impugned order have held that it therefore cannot be said that the reversal of credit at the time of clearance would amount to as if credit has not been taken. In the instant case, the appellants were required to maintain separate account for receipt, consumption and inventory of inputs and inputs services on which cenvat credit was availed, which they have failed to do. Records of the appeal do not show the appellants having opted to pay duty (by way of reversal) under Rule 6(3A) of the Cenvat Credit Rules which was introduced from 1.4.2008. As such they are required to pay duty under rule 6(3) of the Cenvat Credit Rules. Accordingly, the appeal filed by the appellants,(Revenue) merits consideration, and is allowed.

(emphasis supplied)

4. Being aggrieved, the appellant is before this Tribunal and states that it is an admitted fact by the Revenue as is evident from the show cause notice that the appellant had reversed the proportionate Cenvat Credit attributable to the goods cleared valued at Rs.3,45,120/- without payment of duty under Notification No. 06/2006 dated 1.3.2006. Thus, the appellant have been fastened with duty under Rule 6(3) of CCR to pay the amount of 10% only for the reason that the appellant had not followed the procedure and conditions laid down in sub rule (3A ) of Rule 6 of the Cenvat Credit Rules. In view of the substantial compliance made (reversal on inputs duty) only for the procedural lapse of not giving intimation by way of submitting the intimation under Rule 3A, the appellant cannot be visited with an order to pay Rs.34,512/- against the amount already reversed. Accordingly, the appellant prays for allowing the appeal.

4. The learned AR relies on the impugned order.

5. Having considered the rival contentions, I find that the requirement of Rule 6(3), wherein on assessee does not maintain separate records of inputs consumed in the manufacture of duty paid and exempted output, the assessee is required either pay an amount at the fixed percentage (10%/6%) of value of the exempted goods/services or pay an amount as determined under sub-rule (3A). Sub-rule (3A) provides for reversal of proportionate amount attributable to the inputs consumed in the manufacture and clearance of goods without payment of duty. Further sub-rule (3A) provides for filing of an intimation by the assessee giving details as-the name, address, registration number, number of manufactured goods, date from which the option under the clause is exercised or proposed to be exercised, description of dutiable and exempted output and Cenvat Credit of inputs and input services lying in the balance as on date as exercising the option. I find that this issue is no longer res integra. A Division Bench of this Tribunal in the case of Mercedes Benz India Pvt. Ltd. Vs. Commissioner of Central Excise 2014 (36) S.T.R. 704 (Tri. - Mumbai) have held that only for the reason of non-filing or delayed filing of intimation under sub-rule (3A), as assessee cannot be required to pay the fix percentage by way of reversal under Rule 6(3), where the assessee have paid the amount by way of reversal which amounts to substantial compliance. It is further admitted fact that the assessee has intimated the fact of reversal by making categorical mention in the ER-1 returns. I hold that the appellant had made substantial compliance of sub-rule (3A) of Rule 6 of Cenvat Credit Rules. Thus, the appeal is allowed. The appellant is entitled to refund of the amounts paid during the pendency of this appeal and/or by way of pre-deposit with interest as per rules. The adjudicating authority is directed to disburse the amount of refund within a period of 45 days from the date of receipt of a copy of this order along with interest as per rules.

(Pronounced & Dictated in court)

(Anil Choudhary) Member (Judicial)

Sm

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Appeal No. E1525/2010-Mum