Commissioner Of Central Goodsandser Tax vs. Rajasthan Antibiotics LTD Alwar

By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee.

This court while admitting the appeal on 14.02.2018 framed the following question of law:- “i) Whether the ld. CESTAT is correct in dropping the demand of Rs. 20,70,842/- under Rule 14 of the CENVAT Credit Rules, 2004 read with proviso to Section 11A(1) of the Central Excise Act, 1944 along with interest and equal penalty?”

The facts of the case are that the assessee appellant is engaged in manufacture of Antibiotics, falling under Chapter 29 of the Central Excise Act, 1985. The said goods attract payment of the Central Excise Duty. The appellant also manufactures Hydro cortisone and Quinine Sulphate, which are exempted from payment of duty under Notification No.04/2006-C.E. dated 2303.2006. During the course of audit of records in the factory premises of the appellant, the central excise officers observed that the appellant had not paid the amount of 5%, 10% in terms of Rule6(3)(i) of the cenvat credit rules, 2004. Accordingly, after issuance of show cause notice, the matter was adjudicated against the appellant in confirming the demand of Rs.20,79,378 and imposing equal amount of penalty.

Mr. Siddharth Ranka has taken us to the provisions of Rule 6(1) of the Cenvat Credit Rules,2004 more particularly Rule6(3) (b) which reads as under:- “If the exempted goods are other than those

1 He has also contended in view of amended provisions which reads as under:- Rule 6(3A) for determination and payment of amount payable under clause(ii) of sub-rule(3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, a) while exercising this option, the manufacturer of goods or the provider of output service shall (3 of 29) [EXCIA-128/2017] intimate in writing to the Superintendent of Central Excise giving the following particulars, namely:- (i)name, address and registration No. of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description of dutiable goods or taxable services; (iv) description of exempted goods or exempted services; (v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition; b) the manufacturer of goods or the provider of output service shall, determine and pay, provisionally,

He contended that the assessee while doing so, has not informed the Department regarding his not maintaining separate account nor he has availed the benefit which was required to be done within a period of 6 months. He has taken us to the order of Original Authority wherein it has been observed as under:-

He has also taken us through the observations made by the authority holding as under:-

Accordingly, I pass the following order: ORDER (I) I confirm the demand of Rs.20,79,378/- (Rupees Twenty Lacs Seventy Nine Thousand Three Hundred and Seventy Eight Only) and order to recover it from M/s. Rajasthan Antibiotic Ltd. A-619 & 630 RIICO Industrial Area Bhiwadi Distt. Alwar (Raj.) under Rule 14 of Cenvat Credit Rules, 2004 read with proviso to Section 11A(1) of the Central Excise Act. (ii) I order recovery of interest at appropriate rates from M/s. Rajasthan Antibiotic Ltd. A-619 & 630 RIICO Industrial Area Bhiwadi Distt. Alwar (Raj.) on the amount of Rs.20,79,378/- under (7 of 29) [EXCIA-128/2017] Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944; and (iii) I impose a penalty of Rs.20,79,378/-(Rupees Twenty Lacs Seventy Nine Thousand Three Hundred and Seventy Eight Only) upon M/s. Rajasthan Antibiotic Ltd. A-619 & 630 RIICO Industrial Area Bhiwadi Distt. Alwar (Raj.) under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. However, benefit of reduced penalty of 25% as per proviso to Section 11AC ibid, is available to the assessee subject to the condition that an amount of Rs.20,79,378/- (Rupees Twenty Lacs Seventy Nine Thousand Three Hundred and Seventy Eight Only) and the interest payable thereon under Section 11AB, is paid within thirty days from the date of communication of this order and further subject to the condition that the benefit of reduced penalty (25% of Rs.20,79,378/-) shall be available if the amount of penalty so determined has also been paid within the period of thirty days from the date of communication of this order.

He submitted that the appellate authority while considering the matter observed as under:-

On perusal of the above, Rule, I find that a manufacturer manufacturing both dutiable and exempted products has following options:-

In the instant case, I find that it is an admitted fact that the appellant have not maintained separate accounts for the inputs used in the manufacture of exempted and dutiable goods and they have also not exercised the option to pay an amount equal to the Cenvat Credit Attributable to inputs used in or in relation to manufacture of exempted goods available to the, therefore, as per statutory requirement the (8 of 29) [EXCIA-128/2017] appellant were required to pay an amount equal to 10%/5%(as applicable during the relevant period) of the value of the exempted goods in terms of Rule(3)(b)/6(3) (i)ibid. The Board vide Circular No.654/45/2002-CX dated 19.08.2002 had also clarified that the assessee who has maintained separate inventory and has takne credit on common inputs to manufacture dutiable and exempted products has no option but to reverse 8% of the price of the exempted goods as provisions of Sub-Rule(3)(b) of the said Rule6. This apart the rule if properly read starts with the words”Cenvat Credit shall not be allowed” Therefore, Rule 6 makes it clear that in so far as inputs are used in both, for manufacturing of final products which may be dutiable and other final products which are exempt, it has been conspicuously provided that such manufacturer will be given credit in so far as inputs used for manufacturing of dutiable goods, if accounts are maintained in terms of the rules. The rules further contemplate that on failure to maintain accounts in terms of Rule6(2) the consequences would be in terms of Rule 6(3)(a) or (b). The rule has to be read together to understand the object of the Rule. Once a manufacturer manufactures from common inputs two final products, one dutiable and the other exempted. Rule6(2) would be attracted and on failure to maintain separate records, Rule 6(3) would apply. The rule mandates specifically that an assessee seeking to avail Cenvat Credit in respect of inputs used in the manufacture of exempted goods, the only method to which he can avail of is by following Sub-rule(2). Sub-rule2 provides for maintaining accounts. If a manufacturer opting not to maintain separate account of inputs used in dutiable and exempted final products in terms of Rule6(3)(b), he shall pay an amount equal to 10%/5%(as applicable during the relevant period) on total price charges by the manufacturer for sale of the such exempted final products. “

He contended that the appellate authority has completely discussed the amended provisions and rightly held in favour of the department, however, the Tribunal has seriously committed an error in observing as under:- “The period of dispute involved in this case is from March 2006 to October 2010. The fact is not under dispute that the appellant had used the (9 of 29) [EXCIA-128/2017] common inputs namely, Aluminum container and Thermocal Sheet as packing material and Furnace Oil for manufacturer of both dutiable and exempted final products and that upon pointing out the fact of taking such credit by the auditing wing of Central Excise Department, the appellant had reversed the proportionate cenvat credit taken of such common inputs. However, the contention of the Department is that the appellant should not have taken cenvat credit on those inputs and since has taken credit, should have maintained separate records and in absence of non maintenance of records, the appellant is liable to pay amount of 5%/10% of the value of exempted goods removed from factory.

He has taken through the circular dated 19th August, 2002 wherein it has been provided as under:- “Board observes that the provisions of Rule 6 of Cenvat Credit Rules, 2002 are unambiguous and clear. However, there appears to be certain misconception in field formations regarding applicability of the said rule and the same circular. Accordingly, it is informed that the said circular was issued to clarify the legal position at the relevant period only. In terms of Rule 6, the assessee who has not maintained separate inventory and has taken credit on common inputs to manufacture dutiable and exempted products [except in cases mentioned in the provisions contained in sub-Rule(3) (a) has no option the Explanation-II to the said rule, if the said amount is not paid, it shall be recovered along with interest in the manner as provided in Rule 12 of Cenvat Credit Rules, 2002. Provisions of Rule 13 would also get attracted.”

He has also relied the following decisions:- (1) Central Excise, 2013(288)ELT289(Tri. - Mumbai)

2 The undisputed facts in this case are that the appellant availed input service tax credit in respect of both dutiable as well as exempted final products and did not maintain separate accounts with respect to the such availment. Therefore, as per the provisions of Rule 6(3) of the Cenvat Credit Rules, they were required to pay an amount equivalent to 10% of the value of the (10 of 29) [EXCIA-128/2017] exempted goods cleared. Therefore, the confirmation of demand in this regard along with interest thereon cannot be faulted.

4 In the case before me the facts are completely different. The appellant herein, has not reversed proportionate credit attributable to exempted goods at the time of clearance of the exempted goods nor have they sought to regularize the same even after the enactment of Finance Act, 2010 within the time period stipulated therein. Section 69 of the Finance Act, 2010 specifically provided that the person who was availed the credit wrongly, should opt for the facility specified therein and make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountant or Cost Accountant certifying the input credit attributable to the inputs used in or in relation to the manufacture of final products, which are exempted from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President. On such application, the Commissioner of Central Excise can call upon the applicant to pay the differential amount along with interest, which shall be paid within a period of ten days from the date of receipt of the communication from the Commissioner in this regard. It may thus be seen that specific time-limits have been prescribed in the Finance Act, 2010 for regularization of the Cenvat Credit wrongly taken. The appellant herein has not followed the procedure prescribed nor have they reversed the Cenvat credit. This Tribunal being a creation of the statute cannot over look or condone the time-limits specified in the statute. Therefore, I am of the view that the benefit of decision of the Hon'ble High Court of Gujarat in the Shree Rama Multi Tech Ltd., case cited supra cannot be granted to the appellant at this juncture. Inasmuch as the time-limit expired in November 2010 itself and the appellant herein did not comply with the conditions stipulated therein, I hold that the order passed by the lower authorities cannot be faulted. The only relief that can be given to the appellant is with regard to the penalties imposed. Since there is no intention to evade any duty and taking into account the facts and circumstances of the case, I set aside the penalties imposed on the appellant. But for the above modification, the order of the lower appellate authority is upheld and the appeal is dismissed.”

The position prevailing prior to 1st September 1996 may be considered to better understand the controversy. Rule 57A of the erstwhile Central Excise Rules, 1944 allowed credit of specified duties paid on inputs used in the manufacture of finished excisable goods (hereinafter referred to as final products). Rule 57C of the erstwhile Central Excise Rules, 1944 read as under: "Credit of duty not to be allowed if final products are exempt. - No credit of specified duty paid on the inputs used in the manufacture of final product (other than those cleared either to a unit in a Free Trade Zone or to a hundred percent Export Oriented Unit or to a unit in Electronic Hardware Technology Park or to a unit in Software Technology Parks) shall be allowed if the final product is exempt from (13 of 29) [EXCIA-128/2017] the whole of duty of excise leviable thereon or is chargeable to Nil rate of duty". Practical accounting difficulties were faced in those cases where a manufacturer produced dutiable final product say car and also exempted final product say tractor. In such case, in law, no credit is available on input used in the manufacture of tractor. It was not reasonable possible to separate the inputs like steel sheet, paints etc, to be utilized in manufacture of both the final products, say car and tractor. In that context, it was clarified by the Central Government vide Circular No.5/87, dated 7.1.1987 as under: "A reference is invited to Board's instructions F.No.b.22/3/86-TRU, dated the 10th April, 1986, wherein it has been clarified with regard to Point No.5 that Modvat credit is not available if the final products ar exempt or are chargeable to nil rate of duty. However, where a manufacturer produces along with dutiable final products, final products which would be exempted from duty by a notification (e.g. an end-use notification and in respect of which it is not reasonably possible to segregate the inputs, the manufacturer may be allowed to take credit of duty paid on all inputs used in the manufacture of the final products, provided that credit of duty paid on the inputs used in such exempted products is debited in the credit account before the removal of such exempted final products." (4) Court in the case of CCE, Ahmedabad-II v. Maize Products [supra] has found approval in the legislative scheme. It was further submitted that since the Petitioners have already reversed the amount of credit taken

Examining the facts of the present case in the light of the newly amended statutory scheme, in the present case the Petitioners were bona fide prosecuting theremedy before this Court, hence, pending the petition they have not made any application as contemplated under Sub-section (2) of Section 69 of the said Act. It is the case of the Petitioners that they are not required to make any such application since they have already reversed the amount of credit taken in respect of the common input used in the manufacture of product carrying nil rate of duty. However, in the light of the amended provisions of the Central Excise Rules, 1944 it is not necessary to consider the rival contentions on merits since the amended provisions take care of a situation like the present one.”

He contended that Rama Multi Tech Ltd.(Supra) was filed in 2000 and came to be decided in 2011. He has also taken us to the 2015[40]S.T.R.771(Tri. - Del), wherein it has been held as under:-

The appellant used 6 common input services which are used in or in relation to manufacture of dutiable final product as well as exempted final product. During the period of dispute, the total cenvat credit attributable to these common input service is Rs. 15,52,417/-. However, there is no dispute that during previous financial year, the proportion of the turnover of exempted final product was 70% and on this basis during the period of dispute, the appellant have foregone 70% of the cenvat credit in respect of these mix common input services and accordingly, have availed cenvat credit of Rs. 4,65,725/- attributable to the input services used in or in relation to the manufacture of the dutiable final product and have foregone the cenvat credit of Rs. 10,86,692/- in respect of the services used for exempted final product. The point of dispute is and whether just because the appellant did not maintain separate account and inventory of the input services meant for dutiable and exempted final

He has also relied upon judgment of Commr. of C. Ex., Salem Vs. Salem Co-operative Sugar Mills Ltd. 2016(339)ELT572(Mad.), wherein it has been held as under:- “9. Both the learned counsel for the parties, have consented for the order impugned in Final Order No. 41001/2014, dated 11-12-2014 passed by Customs, Excise and Service Tax Appellate Tribunal, Chennai - 600 006 to be set aside and the matter be remanded for adjudication on the following points: (i) The respondents having failed to maintain separate accounts for dutiable and non-dutiable goods.

Placing on record the above submissions, impugned Final Order No. 41001/2014, dated 11-12-2014 passed by Customs, Excise and Service Tax Appellate Tribunal, Chennai - 600 006 is set aside. Civil miscellaneous appeal is allowed to the extent indicated. The matter is remanded to Tribunal to deal with the above issues in accordance with law. Tribunal is directed to issue notice to the parties concerned. However, there shall be no order as to cost.”

He therefore contended that the reversal is after the show cause notice has been issued.

Counsel for the respondent has relied upon the following decision:- (1) No. 879, 880/08, held as follows:

After examining the cited case law, we find that the principle applied in those cases is that MODV AT/CENVAT credit taken and subsequently reversed is as good as not taken. In all cases, the assessees had taken credit on common inputs/input services which were used in the manufacture of dutiable and exempted final

We have heard learned counsel for the parties and perused the record. In our view, the order of the Tribunal is just and proper and is not required to be interfered with. The Tribunal has taken into consideration the finding that admittedly during the course of adjudication the assessee submitted that they have reversed the total credit availed of by them during March 2008 to the extent of Rs. 2,06,541/- along with interest of Rs. 17,093/- and once they reversed the total credit and deposited the same, they became entitled to the benefit of Notification. The Tribunal further found that subsequent reversal of credit even after utilization of the same and clearance of the final product will relate to a situation as if no credit was ever availed, and Tribunal on finding of fact found that the respondent is entitled to full waiver.

The Allahabad High Court in the case of Hello Minerals Water (P) Ltd. (supra) had taken into consideration the question as to whether manufacturer can be treated as not having taken credit on the inputs used in the manufacture of any product even though it was originally taken but subsequently reversed, and held that the Revenue was not justified in holding a different view that reversal of the credit having been made by the petitioner after removal of the final products the petitioner was not entitled to the benefit. The Allahabad High Court further found that where the specific issue was whether the reversal of credit subsequent to removal of goods was fatal to the extension of benefits of the Notification considered the matter at length and had found that the majority decision of the five member Bench of the Tribunal upheld the argument of the assessee therein and held that reversal of credit subsequent to the clearance of the exempted product is in line with the ratio of the Supreme Court judgment laid down in Chandrapur Magnet Wires (P) Ltd. v. Collector, Central Excise, MANU/SC/1061/1996 : 1996 (81) E.L.T. 3 (S.C.). Accordingly, in our view the said judgment squarely covers the issue raised in the instant appeal.

The Gujarat High Court in the case of Ashima Dyecot Ltd. (supra), also took into consideration the judgment rendered by the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra), and observed as under:-- "

The findings rendered by the Honourable Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra) are clearly applicable to the present matters. In that case also, the case of the Department was that reversal of credit entries is not permitted by the rules. The assessee is not entitled to remove the copper wires without payment of duty since credit of the duty paid on the inputs used in the manufacture of copper wire had already been taken in accordance with Rule 57A. Once appropriate entries have been made in the register, there is no rule under which the process could be reversed. It is true that the assessee has not maintained separate accounts or segregated the inputs utilised for manufacture of dutiable goods and duty free goods, as should have been done. But, the Court's attention was drawn to the departmental circular according to which in a case where the manufacturer produces dutiable final products and also final goods which are exempt from duty and it is not reasonably possible to segregate inputs utilised in manufacture of the dutiable final products from the final products which are exempt from duty. Based on this, the Court held that the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid and in view of this clarification by the Department, the Court saw no reason that why the assessee should not make a debit entry in the credit account before removal of the exempted final product and hence, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. The Court, therefore, took the view that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken the credit of the duty paid in the inputs used in manufacture of these goods. The ratio laid down in this decision is squarely applicable to the facts of the present case and maintenance of separate books of accounts at the initial stage cannot be considered to be a condition precedent for the purpose of claiming the benefit of exemption to the respondent-assessee."

The judgments relied upon by the learned counsel for the appellant are on different proposition and distinguishable on facts.

Taking into consideration the finding recorded by the Tribunal, in our view it is essentially based on facts on the basis of evidence on record and no substantial question of law can be said to emerge out of the impugned order.

Consequently, we do not find any infirmity or illegality in the impugned order passed by the Tribunal so as to call for interference. The appeal is accordingly dismissed. (4). In Commissioner of Central Excise & Customs Vs. Precot Meridian Ltd. 2015(325) E.L.T. 234 (S.C.) decided on 8.10.2015 it has been held as under:

We note that five-member Bench of the Tribunal in the case of 'Franco Italian Co. Pvt. Ltd. V. Commissioner [2000 (120) E.L.T. 792 (T.-LB)] had taken the view that even if the MODVAT credit was utilised but, thereafter, refunded, it would amount to not utilising the said MODVAT credit. Same view has been taken by the High Court of Allahabad in 'Hello Minerals Water (P) Ltd. v. Union of India [2004(174) E.L.T. 422 (All.)].

On a specific query put by the Court, we were 2008[12]S.T.R.701(Guj.)

We have considered the submissions made by the learned Standing Counsel appearing for the Department and we have also gone through the orders passed by the authorities below. Though there is not much discussion in the order of the Tribunal, the learned Commissioner of Central Excise, has discussed the entire issue at great length. After discussing about the relevant provisions contained in the notifications, rules and submissions of the assessee's representative, the Commissioner of Central Excise has decided the matter against the assessee only on the ground that manufacturer had not maintained separate books of accounts for the goods availing of the benefit of Notification No. 29 of 2004 and for the goods availing of the benefit of Notification No. 30 of 2004. He has further observed that the circular does not speak of final goods or inputs, but, it refers to the goods only and then, he came to the conclusion that as the subjected two notifications refer to the aspect of credit being taken or otherwise of inputs, maintenance of separate accounts for inputs is of prime importance. Since this condition was not satisfied, he confirmed the levy of duty, penalty, etc. This finding of the learned Commissioner of Central Excise is not in consonance with the observations made and the ratio laid down by the Honourable Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra).

The findings rendered by the Honourable Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra) are clearly applicable to the present matters. In that case also, the case of the Department was that reversal of credit entries is not permitted by the rules. The assessee is not entitled to remove the copper wires without payment of duty since credit of the duty paid on the inputs used in the manufacture of copper wire had already been taken in accordance with Rule 57A. Once appropriate entries have been made in the register, there is no rule under which the process could be reversed. It is true that the assessee has not maintained separate accounts or (24 of 29) [EXCIA-128/2017] segregated the inputs utilised for manufacture of dutiable goods and duty free goods, as should have been done. But, the Court's attention was drawn to the departmental circular according to which in a case where the manufacturer produces dutiable final products and also final goods which are exempt from duty and it is not reasonably possible to segregate inputs utilised in manufacture of the dutiable final products from the final products which are exempt from duty based on this, the Court held that the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid and in view of this clarification by the Department, the Court saw no reason that why the assessee should not make a debit entry in the credit account before removal of the exempted final product and hence, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. The Court, therefore, took the view that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken the credit of the duty paid in the inputs used in manufacture of these goods. The ratio laid down in this decision is squarely applicable to the facts of the present case and maintenance of separate books of accounts at the initial stage cannot be considered to be a condition precedent for the purpose of claiming the benefit of exemption to the respondent-assessee.

Even Rule 6(3) of the Cenvat Credit Rules, 2004 says that notwithstanding anything contained in Sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely: (a) if the exempted goods are- (i) xxx xxx xxx xxx (ii) xxx xxx xxx xxx (iii) xxx xxx xxx xxx (iv) xxx xxx xxx xxx (v) xxx xxx xxx xxx (vi) final products falling within Chapter 50 to 63 of the said First Schedule; xxx xxx xxx xxx xxx xxx xxx xxx

Even otherwise, Rule 3 says that the manufacturer or producer of the final product or (25 of 29) [EXCIA-128/2017] provider of output services shall be allowed to take credit on various items enumerated therein.

This issue had come up for consideration before the Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India reported

In these circumstances the order of the Tribunal dated 1-10-2003 in so far as it relates to denial of the benefit of Notification No. 15/1994- CE is liable to be, and is hereby, set aside. The petitioner is thus entitled to the benefit of the said Notification No. 15/1994-CE, dated 1-3-2004 and reversal of Modvat credit on the inputs namely PVC granules used in the manufacture of PVC/PP [EXCIA-128/2017] credit under rule 6 was to have retrospective effect from September, 2004. The said amendment is provided for by insertion under rule 6(6). The said amendment reads as under (See [2011] 7 GSTR (St.) 327): : Thus, the said rule covers the case of the assessees in whose cases there existed a dispute relating to adjustment of credit on inputs or input services used in or in relation to exempted final products and the period of dispute related to the period beginning from September 10, 2004 to March 31, 2008. In such cases, as per section 73(2) of the Finance Act, 2010, the asses- see has to make an application to the Commissioner of Central Excise along with (27 of 29) [EXCIA-128/2017] documentary evidence and a certificate from the 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 received the assent of the President. Thus, the Finance Act, effective from May 8, 2010 to November 7, 2010--the six months period, expired on November 7, 2010. The period covered in this appeal is from April, 2008 to December, 2008. 13. Admittedly, the Revenue did not raise any question as regards the noncompliance of sub- rule (3A) of rule 6 of the Cenvat Credit Rules before the Tribunal. The submission of the Revenue before the Tribunal was that if proper reversal of credit attributable to the inputs used in the manufacture of exempted products was done, there was no scope for further demand. The learned counsel for the Revenue pointed out that the adjudicating officer categorically pointed out in paragraph 7.11, that there was nothing on record to show that the qualifying procedure and conditions specified under sub-rule (3A) for payment of amount under clause (ii) of sub-rule (3) of rule 6 had been followed by the assessee during the material period. He further pointed out that as per the Explanation to sub-rule (3A) to rule 6, the manufacturer should have availed of any of the options, failing which, the question of considering the claim even as per sub-rule (3A) of rule 6 does not arise. We do not find any justification in accepting the plea of the Revenue. Considering the submission made by the Department's representative before the Tribunal in the absence of a question raised before the Tribunal as regards the non-compliance of the option granted under the Explanation and the only question that was raised before the Tribunal being on the entitlement of the assessee on the reversal of credit attributable to the inputs used in the manufacture of exempted products, we do not find any justification to grant the relief sought for in the appeal. For the purpose of this case, it is not necessary at all for us to consider section 73(2) of the Finance Act, 2010 at all. Consequently, the order of the Tribunal is confirmed. The adjudicating authority shall consider the contentions of the assessee under section 73 of the Finance Act, 2010 and as per rule 6 of the Cenvat Credit Rules. The above civil miscellaneous appeal is dismissed. No costs. Consequently, the connected MP is closed.

In our view w.e.f. 01.03.2008 Rule 6(3) had been amended to give an additional option to a manufacture manufacturing dutiable as well as exempting final product by using common cenvat credit availed input/input services and this additional option was to reverse the proportionate cenvat credit attributable to input/input services used in or in relation to manufacture of exempted final product. The proportionate amount of cenvat credit attributable to the input/input services used in or in relation to manufacture of exempted final product was to be calculated as per the formula prescribed in Rule 6(3A). By Finance Act, 2010, the above provisions were made retrospectively applicable. Hon'ble Gujarat High Court in case of Sh. Rama Multitech Ltd. v. UOI reported in MANU/GJ/0704/2011 : 2011 (267) ELT 153 Guj has held that even if a separate account have not been maintained, in view of retrospective amendment by Finance Act, 2010, a manufacturer using common inputs in or in relation to manufacture of dutiable as well as exempted final product would be entitled to reverse the proportionate cenvat credit. In view of this position, during the period of dispute the option of paying an amount equal to 10% of the sale value of the exempted goods cannot be forced upon the appellant and the appellant would be entitled to reverse the cenvat credit attributable to the inputs/input services used in or in relation to the manufacture of the exempted final product. According to the appellant, they have not taken and have foregone the cenvat credit attributable to the quantum of input services, attributable the turnover of exempted final product and this fact is not disputed. The Commissioner does not even dispute the quantum of the credit foregone. Once, the appellant have foregone the proportionate cenvat credit in respect of input services used in or in relation of the manufacture of exempted final product, they have to be treated as complied with the provisions of sub Rule (3) of Rule 6 and hence, there cannot be any demand of amount under Rule 6(3)(b). The judgment of Hon'ble Bombay High Court in case of CCE Thane-I v. Nicholas Piramal (India) Ltd.(Supra) is of the period when the retrospective amendment to Rule 6(3) by Finance Act, 2010 had not been made and hence, this judgment of Hon'ble High Court is not applicable to the facts of this case. In view of the retrospective amendment introduced by Finance

Taking into consideration the law as discussed above, we are of the opinion that the Tribunal while considering the matter has followed the judgment in IPCA Laboratories(Supra) which has not been challenged and discussed the judgment in Rama Multi Tech (supra) and other decision of Nicolas Piramal India (supra) which has been sought to be relied upon by the Tribunal.

In our considered opinion, the finding of the Tribunal is just and proper and the issue is required to be answered in favour of the assessee against the department.

The appeal stands dismissed. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J B.M.G/Gourav/42