EXCISE APPEAL NO. 10583 OF 2013
(Arising out of OIO-97-COMMR-SURAT-II-2012 dated 28.12.2012 passed by
Commissioner of Central Excise-SURAT-II)
SANOFI INDIA LIMITED
VERSUS
C.C.E. & S.T.- SURAT-II
WITH
EXCISE APPEAL NO. 10582 OF 2013
(Arising out of OIO-97-COMMR-SURAT-II-2012 dated 28.12.2012 passed by
Commissioner of Central Excise-SURAT-II)
SHYAM MOHAN PATRO
VERSUS
C.C.E. & S.T.- SURAT-II
AND
Excise APPEAL NO. 10584 OF 2013
(Arising out of OIO-97-COMMR-SURAT-II-2012 dated 28.12.2012 passed by
Commissioner of Central Excise-SURAT-II)
ANIL INDRAVADAN AMDAWADI
VERSUS
C.C.E. & S.T.- SURAT-II
APPEARANCE:
Shri. Jigar Shah & Amber Kumrawat, Advocate for the Appellant
Shri. V.G. Iyengar, Authorized Representative for the Respondent
CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR
HON’BLE MEMBER (TECHNICAL), MR. RAJU
Final Order No.___A/__ 10115-10117 /2023
DATE OF HEARING: 13.01.2023
DATE OF DECISION:25.01.2023
The brief facts of the case are that the appellant are engaged in
manufacture of excisable goods falling under Chapter 29 & 30 of the
Schedule to Central Excise Tariff Act, 1985.
1.1 The appellant are also availing the benefit of exemption Notification
in respect of their product, namely, Insuman, Lantus (Notification No.
06/03 dated 01.03.2003 as amended), Campto Injection and Granocyte
Injection (Notification No. 55/02 dated 07.11.2002).
1.2 They are clearing the goods, namely, Vaxem HIB at nil rate of duty.
The appellant started availing cenvat credit on various input services from
March 2005. The case of the department is 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.
Shri Jigar Shah, learned Counsel appearing on behalf of the
appellant submits that the appellant have reversed the entire credit of
common input services used in the manufacture of dutiable as well as
exempted goods, therefore, the demand of 10% of the value of the
exempted goods in terms of Rule 6(3) will not sustain.
2.1 He further submits that in terms of Rule 6 there is an option for the
appellant to reverse the proportionate credit attributed to exempted
goods. With the said reversal on proportionate credit, no demand of 10%
of the value can be made. He also submits that the demand was raised
for the period March 2005 to January 2007 whereas the Show Cause
Notice was issued on 26.02.2010, therefore, the entire demand is beyond
limitation. He submits that there is no suppression of the fact on the part
of the appellant as entire detail of availment of cenvat credit was declared
in the monthly returns regularly, therefore, there is no suppression of fact
on the part of the appellant. Hence, the entire demand is time bar also.
He placed reliance on the following judgements:
Pushpam Pharmaceuticals Company 1995 (78) ELT 401 (SC)
Continental Foundation Joint Ventre Holding 2007 (216) ELT
177 (SC)
Biochem Pharmaceuticals Industries Ltd. 2021 (10) TMI 1285
Mercedes Benz India (P) Ltd. 2015 (40) STR 381 (Tri Mum)
CCE vs Himmat Glazed Tiles 2018 (15) GSTL 486(Guj HC)
Welspun Corp Ltd. 2019 (368) ELT 179 (Tri. Ahmd)
Bombay Minerals Ltd. 2019 (29) GSTL 361 (Tri.Amd.)
Tiara Advertising 2019 (30) GSTL474
Chandrapur Magnet Wires 1996 (81) ELT 3 (SC)
Jai Balaji Industries Ltd. 2017 (352) ELT 86 (Tri. Del.)
affirmed by Hon’ble High Court 2017 (356) ELT A48 and
Hon’ble Supreme Court 2018 (360) ELT A121 (SC)
CCE vs Amritlal Chemaux Ltd. 2015 (5) TMI 700 (SC)
Beri Mercurio 2018 (11) TMI 737
Johnson & Johnson Ltd. 2003 (156) ELT 134 affirmed by
Hon’ble Supreme Court 2005 (188) ELT 467
2.2 Shri Jigar Shah also submits that the appellant as per the provision
is required to reverse the proportionate credit attributed to the exempted
goods. As against the proportionate credit the appellant have reversed
much more amount i.e. entire credit on the common input service
amounting to Rs. 22,18,585/-. It is his submission that the amount over
and above the proportionate credit may be adjusted against the liability
of interest, if any arise.
Shri V.G. Iyengar, learned (Superintendent) Authorized
Representative appearing on behalf of the Revenue reiterates the findings
of the impugned order.
We have carefully considered the submissions made by both the
sides and perused the records. We find that the neat question involved in
the present case is that 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 however,
subsequently, the entire cenvat credit on common input service was
reversed. We find that this issue has been considered in various
judgements as cited by the appellant wherefrom we find 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. In the present case as per
the submission of the appellant, the entire credit of Rs. 22,18,585/- has
been reversed on all the common input service used in or in relation to
manufacture of dutiable and exempted goods. However, the appellant
has argued that since they were liable to reverse the proportionate credit,
the amount over and above the proportionate credit may be adjusted
against the interest liability, if any, arises. We find that adjudicating
authority straight away demanded 10% of the value of exempted goods.
Therefore, he neither examined the reversal of cenvat credit made by the
appellant nor even calculated the proportionate credit. The submission of
the appellant also needs to be reconsidered whether the excess amount
can be adjusted against the interest.
We are of the view that on the above observation, the matter needs
to be reconsidered. As regard, the personal penalty, firstly the appellant
company has reversed the credit accordingly, the demand is not prima
facie sustainable. Consequently, since the issue relates to the
interpretation of Rule 6 of Cenvat Credit Rules, 2004, malafide intention
of the present employee with the appellant cannot be attributed.
Therefore, considering the facts of the present case, we are of the
considered view the personal penalty imposed on the appellant is not
sustainable. Hence the same is set aside. In the result, appeal No.
E/10583/2013 (Sanofi India Ltd.) is allowed by way of remand to the
adjudicating authority. Appeal No. E/10582 /2013 (Shyam Mohan Patro)
& E/1084/2013 (Anil Indravadan Amdawadi) respectively are allowed.
(Pronounced in the open court on 25.01.2023)
(RAMESH NAIR)
MEMBER (JUDICIAL)
(RAJU)
MEMBER (TECHNICAL)
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