Order date: 25 January, 2023

Parities: SANOFI INDIA LIMITED and 2 others vs C.C.E. & S.T.- SURAT-II and Others 

Fact

• The Appellant SANOFI INDIA LIMITED and others are engaged in manufacture of excisable goods falling under Chapter 29 & 30 of the Schedule to Central Excise Tariff Act, 1985, availing the benefit of exemption Notification in respect of their product, namely, Insuman, Lantus. They are clearing the goods at nil rate of duty.
• The appellant started availing cenvat credit on various input services from March 2005.
• Department alleged that since the appellant are availing the cenvat credit in respect of common input services, they are liable to pay 10% of the value of exempted goods or goods attracted nil rate of duty in terms of Rule 6(3) of the Cenvat Credit Rules 2004.

 Issue 

• whether the appellant is liable to pay 10% of the value of exempted goods when they have availed the cenvat credit on common input service used in the exempted and dutiable goods?

Order 

• The Tribunal observed that once the assessee has reversed the proportionate credit attributed to the exempted goods, no demand of 10% of the value of goods can be raised by the department. Reversal of proportionate credit is one of the option provided under Rule 6(3). Therefore, it is upto the assessee which option needs to be availed. The department cannot arbitrarily choose any particular option and impose on the assessee.
• Appeals are allowed.