Denial of benefit of Rule 6(7) is not justifiable when procedure prescribed followed.

PJ/Case Laws/2012-13/1436

Case:- GLAXOSMITHKLINE CONSUMER HEALTHCARE LTD. V/S C.C.E. & C., VISAKHAPATNAM-II

Citation:- 2013(287) E.L.T. 219 (Tri. - Bang.)

Brief Facts: - Miscellaneous applications filed by the appellant seek out-of-turn disposal of the respective appeals. One of the appeals is directed against a demand for the period from 1-3-2005 to 31-10-2007 and the other appeal is against a similar demand for the period from 1-11-2007 to 30-9-2008. The impugned demands were raised under Rule 6(3) of the Cenvat Credit Rules, 2004 on the ground that the appellant availed Cenvat credit on common input services used in the manufacture of dutiable and exempted goods during the periods of dispute without maintaining separate accounts/inventory in respect of such input services vis-a-vis the final products cleared on payment of duty and the final products cleared without payment of duty.

Appellant’s Contention: - The appellant submits that the new sub-rule (7) inserted under Rule 6 ibid enables them to claim exemption with retrospective effect. The provisions of sub-rule (7) are referred as follows:-
“(17) Where a dispute relating to adjusting of credit on inputs or input services used in or in relation to exempted final products relating to the period beginning on the 10th day of September, 2004 and ending with the 31st day of March 2008 (both days inclusive) is pending on the date on which the Finance Bill, 2010 receives the assent of the President, then notwithstanding anything contained in sub-rules (1) and (2) and clauses (a) and (b) of sub-rule (3), a manufacturer availing CENVAT credit in respect of any inputs of chargeable to duty and also other final products which are exempted goods may pay an amount equivalent to CENVAT credit attributable to the inputs or input services used in or in relation to the manufacture of exempted goods before or after the clearance of such goods.”
The procedure for claiming the benefit under sub-rule (7) of Rule 6 of the Cenvat Credit Rules, 2004 was also prescribed under the Finance Act, 2010 vide Section 73(2) which is as follows:-
“73. Amendment of rule 6 of CENVAT Credit Rules, 2004. -

(2) Where a person opts to pay the amount in accordance with the provisions as amended by sub-section (1), he shall pay the amount along with interest specified thereunder and make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountant or a Cost Accountant, certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of exempted goods, within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President.”
In terms of the above procedure, they submitted applications to the Commissioner on 9-7-2010 and these applications were not entertained on the ground that the case had already been adjudicated. In this connection, they produced copies of letters dated 4-8-2010 issued to them by the Superintendent (ADJ), which indicate that the Commissioner expressed inability to act upon their request as the adjudication of the dispute was over.

Respondent’s Contention: - The learned counsel prays for a remand of the matter to Commissioner with appropriate directions.

Reasoning of Judgment: - The Hon’ble Tribunal held that they have heard the learned Superintendent (AR) who has fairly acknowledged the change of law which granted the benefit to eligible persons with retrospective effect subject to compliance with the relevant procedural requirements. Thus, they found a fit case for requesting the learned Commissioner to consider the appellant’s applications dated 9-7-2010 on merits, taking into account sub-rule (7) of Rule 6 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 2010. Needless to say that the learned Commissioner should give the appellant a reasonable opportunity of being heard. In order to enable the learned Commissioner to do the above for the ends of justice, they set aside the impugned orders and allow these appeals by way of remand.

Decision: - The appeal was allowed by way of remand.

Comment:-It is commonly observed that whenever the case turns strongly in favour of the assessee as regards quashing of the order in question, prayer for remanding the case is made by the department as else the demand would become time barred.

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PJ/Case Laws/2012-13/1436

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