Customs, Excise and Gold Tribunal - Mumbai
M/S. Wockhardt Ltd. vs Commissioner Of Central Excise & ... on 26 April, 2001
Equivalent citations: 2000(123)ELT630(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The appellants manufactured Medicaments. They were earlier availing of the credit facility under Rule 56A of the Central Excise Rules, 1944. In 1986 they switched over to the modvat credit systme. On 15.9.87 an order was made by the jurisdictional Superintendent directing them to reverse modvat credit without specifying the amount but specifying the three grounds. The first was that the inputs were not declared for the final products Brexic, Respimax Capsules. The second was that in the case of certain inputs namely Analgon 2T and Paracetamol, the final products were not declared. The third ground was that they had taken credit on Gelatin Capsules which were used for manufacture of medicaments by another manufacturer, which medicaments had been later received by the present appellants, were repacked and were cleared on payment of duty. Against this order assessee went in appel. The Collector (Appeals) set aside the directions contained in three letters and directed denovo consideration. This order was dt. 16.2.89. In the meanwhile on 10.2.88 a show cause notic ewas issued seeking reversal of duty on the first two grounds mentioned above. The period covered was March 1986 to July 1987. No allegations as to suppression etc. were made. This notice was signed by the Superintendent and was returnable to the Assistant Collector. On 30.8.89 the Collector issued a show cause notice for the same period specifically stating that teh earlier notice dt 10.2.88 was puperceded. All the three ground as were initially taken in the written memorandum were again cited. Specific allegation of suppression was made. The arguments were advanced before him, on merits as well as on limitation. He confirmed the demand of Rs. 9,71,253.85 and imposed a penalty of Rs. 1 lakh. Hence the present appeal.
2. We have heard Shri C.S.Lodha for the appellants and Shri J.M.George for the Revenue.
3. On merits we find that the final product Brexic was duly declared in the declaration filed under Rule 56G on 24.3.1986. For the other products, the inputs do not seem to have been specifically mentioned. As regards the second named charge, we find that the input Paracetamol was declared under its technical name but Analgon 2T does not seem to have declared. Shri C.S.Lodha submits that Additional/Supplementary declarations may have been filed, but is unable to show than on record. Shri CS Lodha however submits that the period covered under the dispute was the initial period where the modvat credit scheme was nascent and that neither the department nor the assessees were cleare on many of the provisions. A numbers of directions were made by the Board in effect reducing the rigors of declaration to a great extent. He show us one of the instructions issued from file No. 263/17/87/C.Ex-8 dt. 9.2.88. In this direction the Ministry had not accepted the request of the Trade that only the Chapter numbers and inputs under final products need be given but had directed the Commissioner to deal with the cases on mertis, "keeping in view the fact that if the privat/statutory records maintained by the assessee show that inuts have been received and used in the manufactured by the final products and declarations given in brought terms have been filed then the credit should not be disallowed".
4. Shri C.S. Lodha Ld. Advocate submits that the first two parts are covered under the instructions. We find it to be so.
5. The third objection is material the assessees received certain manufactured medicaments. They thereafter packaged these goods and sold them under notification, which prescribed the basis of assessment as the declared MRP. He submits that while they were operating under Rule 56A of the Central Excise Rules, they were taking credit of the duty paid on the empty Gelatine Capsules which were used by their supplier for making medicaments. This practice was allowed by the department. Shri C.S. Lodha shows us a letter from the jurisdictional Assistant Collector dt. 18.8.84 which shows that such permission was given to them by the department. Shri C.S. Lodha submits that after the change over form proforma credit to modvat this was required to be re-considered but then neither the assessee nor the department went for a review and therefore the assessee could not be blamed for continuation of the situation.
6. The emphasis placed by Shri C.S. Lodha is on the aspect of limitation. It is his submission that the demand confirmed could not sustain because the initial shortcomings were required to be overlooked by the Commissioner, in dealing with the pre 1988 period, provided the assessee was in a position to sustain and substantiate receipt and utilisation of the inputs. He says that this was not disputed. As regards the aspect of credits being taken on Gelatine Capsules he submits that they were entitled to take credit of the duty paid on complete medicaments, which would have been higher quantum, than the credit takne on the Capsules. Therefore there was no question of intent to evade revenue. It is his submission that the assessees can not be charged with suppression.
7. On consideration of the documents and on the submission we find that astrong case on limitation has been made by the assessees. We therefore, allow this appeal with consequential relief if any.
(Pronounced in Court)