Page 194 - ELT_15th June 2020_VOL 372_Part 6th

872 EXCISE LAW TIMES [ Vol. 372

maintain separate accounts for the input services used in or in relation to the
provision of taxable service as well as exempt service i.e. trading of goods. There-
fore, two options were available to them, i.e., either to pay 6% of value of the ex-
empted service or pay an amount equal to the credit attributable to the input ser-
vices used in or in relation to exempt services subject to the provisions of sub-
rule (3A). When the mistake was pointed out, the appellant reversed the propor-
tionate common credit taken on input services used in the provision of exempt
services (trading of goods) along with interest thereon. Therefore, Rule 6(3)(i)
will not have any application, when a credit is taken wrongly and the same is
reversed along with interest as it tantamounts to not taking of the credit at all.
11. I find that the Tribunal in the case of M/s. Mercedes Benz India (P)
Limited v. Commissioner of Central Excise, Pune-I (supra) while dealing with a simi-
lar situation has held as under :-
“5.4 we find that the appellant admittedly paid an amount of
Rs. 4,06,785/- plus interest, this is not under dispute. Therefore in our view,
the appellant have complied with the condition prescribed under Rule
6(3)(ii) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore
demand of huge amount of Rs. 24,71,93,529/- of the total value of the vehi-
cle amounting to Rs. 494,38,70,577/- sold in the market cannot be demand-
ed. We are also of the view that Rule 6 of the Cenvat Credit Rules is not en-
acted to extract illegal amount from the assessee. The main objective of the
Rule 6 is to ensure that the assessee should not avail the Cenvat credit in re-
spect of input or input services which are used in or in relation to the man-
ufacture of the exempted goods or for exempted services. If this is the objec-
tive then at the most amount which is to be recovered shall not be in any
case more than Cenvat credit attributed to the input or input services used
in the exempted goods. It is also observed that in either of the three options
given in sub-rule (3) of Rule 6, there is no provisions that if the assessee
does not opt any of the option at a particular time, then option of payment
of 5% will automatically be applied. Therefore we do not understand that
when the appellant have categorically by way of their intimation opted for
option provided under sub-rule (3)(ii), how Revenue can insist that option
(3)(i) under Rule 6 should be followed by the assessee.
5.5 As discussed above and in the facts of the case that actual Cenvat cred-
it attributed to the exempted services used towards sale of the bought out
cars in terms of Rule 6(3A) comes to Rs. 4,06,785/ whereas adjudicating au-
thority demanded an amount of Rs. 24,71,93,529/-. In our view, any
amount, over and above Rs. 4,06,785/- is not the part of the Cenvat credit,
which required to be reversed. The legislator has not enacted any provision
by which Cenvat credit which is other than the credit attributed to input
services used in exempted goods or services can be recovered from the as-
sessee.”
12. I observe that the facts of the present case are squarely covered by
the above-mentioned decision of the Coordinate Bench of the Tribunal. Accord-
ingly, I hold that the demand confirmed by the lower appellate authority has no
legs and therefore the same cannot be sustained. The impugned order is set aside
and the Appeal filed by the appellant is allowed with consequential benefits, if
any
(Pronounced in the open Court on 30-7-2019)
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