Order Date – 01 March 2023

Parties: HIL LIMITED Vs C.C.E. & S.T.-SURAT-I

Facts –

• The Appellant, HIL LIMITED, have taken the cenvat credit on the common input service which were used for manufacture of dutiable goods as well in relation to exempted service i.e. trading activity.
• However, on pointing out by the department, the appellant have calculated the proportionate credit in respect of common input service attributed to the trading activity and paid the same along with interest.
• The demand of 6/7% was raised by the department on the ground that the appellant have not opted for any of the option before any stage therefore, they are liable to pay 6/7% in terms of Rule 6(3).

Issue – 

• Whether the appellant is liable to pay 6/7% in terms of Rule 6(3)?

Order –

• The Tribunal held that in Rule 6(3) from the different options provided to the assessee in addition to 6/7% payment an option for proportionate reversal of the credit is also provided. Whether option is availed in advance or later stage it is prerogative to the assesse to choose any one of the option. Therefore, merely because the appellant at the relevant time did not opt for any of the option, revenue cannot impose upon the appellant payment of 6/7% of the value of the goods/service.
• Therefore, once it is admitted fact that the appellant have reversed the cenvat credit in respect of common input service attributed to the trading activity and also paid the interest thereon at the relevant time, no demand of 6/7% of the value of the trading activity will sustain.
• Hence the appeal is allowed.