SANOFI INDIA LIMITED VERSUS C.C.E. & S.T.- SURAT-II

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)