Custom, Excise & Service Tax Tribunal
B M Pharmaceuticals vs Chandigarh-I on 18 December, 2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 56695 of 2013
[Arising out of Order-in-Appeal No. 256/CE/Appeals/CHD-I/2012 dated
03.01.2013 passed by the Commissioner (Appeals), Central Excise, Chandigarh-I]
M/s B. M. Pharmaceuticals ......Appellant
47-48, Industrial Area, Phase II,
Chandigarh
VERSUS
Commissioner of Central Excise, ......Respondent
Chandigarh-I Plot No. 19, C R Building, Sector 17-C, Chandigarh WITH Excise Appeal No. 57088 of 2013 [Arising out of Order-in-Appeal No. 256/CE/Appeals/CHD-I/2012 dated 03.01.2013 passed by the Commissioner (Appeals), Central Excise, Chandigarh-I] M/s B. M. Pharmaceuticals ......Appellant 47-48, Industrial Area, Phase II, Chandigarh VERSUS Commissioner of Central Excise, ......Respondent Chandigarh-I Plot No. 19, C R Building, Sector 17-C, Chandigarh APPEARANCE:
Shri Shivang Puri, Advocate for the Appellant Shri Shivam Syal, Authorized Representative for the Respondent CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) 2 E/56695 & 57088/2013 FINAL ORDER NO. 60683-60684/2024 DATE OF HEARING: 18.12.2024 DATE OF DECISION: 18.12.2024 S. S. GARG:
These two appeals are directed against a common impugned order dated 03.01.2013 passed by the Commissioner (Appeals), whereby the learned Commissioner (Appeals) has rejected the appeal of the appellant and upheld the Order-in-Original. 2.1 Briefly stated facts of the present case are that the appellant was engaged in the manufacture pharmaceutical products falling under Chapter 30 of the schedule to the Central Excise Tariff Act, 1985 and was availing the benefit of Notification No. 8/2003-CE dated 01.03.2003 and were also clearing the goods at NIL rate of duty. The appellant was also manufacturing some branded goods on behalf of certain other entities.
2.2 During the course of audit of the appellant's records, it was alleged that the appellant was ineligible for SSI exemption under the notification as the value of their clearances during 2006-07 was to the tune of Rs.6,86,45,813/- being in excess of the cap limit of Rupees four crores. On these allegations, a show cause notice dated 09.04.2009 (SCN-1) was issued by the department pertaining to the period January 2008 to March 2008 asking the appellant to explain why duty along with interest and penalty should not be recovered.
Further, the department invoked extended period of limitation and issued another show cause notice dated 19.08.2009 (SCN-2) for a 3 E/56695 & 57088/2013 the period April 2007 to December 2007. SCN-2 was based on the same facts and arose out of the same audit report which was relied upon in SCN-1.
2.3 The stand of the appellant was that they under the bona-fide belief that the value of Branded Goods (whether exempt or otherwise) was not to be included while computing the cap limit of Rupees four crores and therefore in terms of the notification cleared the goods at NIL duty without claiming any CENVAT credit. 2.4 After following the due process, the Original Authority confirmed the demand and penalty, which has been upheld by the learned Commissioner (Appeals). Hence, the present appeal.
3. Heard both the parties and perused the material on record. 4.1 The learned Counsel for the appellant submits that the impugned order is not sustainable in law and is liable to be set aside as the same has been passed without properly appreciating the facts and the law; and binding judicial precedents. 4.2 The learned Counsel further submits that the demand has been confirmed by invoking the extended period of limitation in defiance of the settled position of law. He also submits that it is a settled position of law that in a case in which a show cause notice has been issued for the earlier period on certain set of facts, then, on the same set of facts, another show cause notice based on the same/similar set of facts invoking the extended period of limitation on the plea of suppression of facts cannot be issued as the facts 4 E/56695 & 57088/2013 were already in the knowledge of the department. In this regard, he relies on the following decisions:
Nizam Sugar Factory Vs. Collector of Central Excise
- 2006 (4) TMI 127 - Supreme Court.
P & B Pharmaceuticals (P) Ltd. Vs. Collector of Central Excise - 2003 (2) TMI 68 - Supreme Court Larsen & Toubro Ltd. Vs. Commissioner of C. Ex, Pune-II - 2007 (5) TMI 1 - Supreme Court Pushpam Pharmaceuticals Company Vs. Collector of C.Ex., Bombay - 1995 (3) TMI 100 - Supreme Court ECE Industries Limited Vs. Commissioner of Central Excise, New Delhi - 2003 (3) TMI 136 - Supreme Court Commissioner of Customs Vs. MMK Jewellers & Another - 2008 (3) TMI 5 - Supreme Court Commissioner Vs. Tetra Pack India Ltd. - 2015 (10) TMI 502 - Supreme Court Pahwa Chemicals Private Limited Vs. Commissioner of C.Ex., Delhi, - 2005 (9) TMI 92 -
Supreme Court Commissioner of C.Ex., Mangalore Vs. Pals Microsystems Ltd. - 2011 (7) TMI 670 - Supreme Court Principal Commissioner of Central Goods and Service Tax, Jalandhar Vs. M/s DSM Anti-
Infectives India Ltd. - 2019 (4) TMI 932 - Punjab & Haryana High Court Commissioner of C.Ex., Delhi-IV Vs. Escorts Limited (TED), Faridabad, - 2008 (2) TMI 437 - Punjab & Haryana High Court 4.3 The learned Counsel further submits that the earlier show cause notice (SCN-1) did not allege any suppression. He further submits that the same sets of facts were examined during the earlier period and no such suppression was alleged at that time. He further submits that it is a settled law that "suppression of facts" is 5 E/56695 & 57088/2013 made when information was not disclosed deliberately to evade payment of duty, merely omission by one to do what he might have done not that he must have done would not render it suppression as held in the case of Anand Nishikawa Co. Ltd. vs. Commissioner of Central Excise, Meerut - 2005 (188) ELT. 149 (S.C.). He also submits that as the dispute pertains to interpretation of a condition to the notification, it cannot be alleged that there is suppression of facts or contravention of law with intention to evade payment of tax. For this submission, he relies on the following decisions:
Tamil Nadu Housing Board Vs. CCE, Madras - 1994 (74) ELT 9 (SC) Uniworth Textiles Ltd. Vs. CCE, Raipur - 2013 (288) ELT 161 (SC) Gangadhar Bulk Movers Pvt. Ltd. Vs. CCE, Nagpur -
2012 (27) STR 258 (Tri. Mum.) M/s Mitra S.K. Pvt. Ltd. Vs. Commr. of Service Tax, Kolkata - 2023 (10) TMI 227 - CESTAT Kolkata M/s Bharat Electronics Limited Vs. Commissioner of G.S.T. and Central Excise, Chennai - 2023 (9) TMI 870 - CESTAT Chennai 4.4 The learned Counsel further submits that even the demand on merit is also not sustainable because in the present case the appellant is manufacturing goods bearing the brand name or trade name of another person, the exemption contained in Notification No. 8/2003-CE is admittedly not available to the said goods, as such clearances are not required to be taken into consideration for computing the total clearance of Rupees four crores. 4.5 He also submits that the department's argument that such branded medicaments are exempted in terms of Notification No. 6 E/56695 & 57088/2013 4/2006 cannot be appreciated inasmuch as the condition 3A(b) refers to the clearance of branded goods which are specifically excluded from the benefit of Notification No. 08/2003. The fact that same are entitled to some other exemption notification, will not change the complexion of the said provisions of (b) of Para 3A of the Notification and to hold so would amount to introduce a new condition or to change the unambiguous wording of such clause, which is not permissible in law. In this regard, he relies on the decision of Principal Bench of the Tribunal in the case of M/s Wenger and Company vs. CCE, Delhi - 2016 (9) TMI 1131 - CESTAT NEW DELHI, wherein it was observed as under:
"8.1 Valuation & Eligibility to claim benefit of Notification No. 8/2007-CE - The appellant pleads that the department added the value of even non-excisable goods and exempted excisable goods which are to be excluded as per the Notification No. 8/2003-CE. In this regard, we observe that the assessee/appellant is correct that for deciding on the eligibility of exemption Notification No. 8/2003-CE the turnover is to be computed after excluding the value of non-excisable and exempted excisable goods. Revenue has to follow this principle that value of non-excisable and non exempted goods are not to be added when the turnover is computed to decide on the entitlement to benefit of Notification No. 8/2003-CE.
8.1.1 The assessee has been manufacturing various kind of items and some of these items may not have the facility of abatement under Central Excise law. Assessable value has to be determined by reducing the sale price in such a manner so as to arrive at the price
7 E/56695 & 57088/2013 on which the manufacturer would have sold the said goods in wholesale. In this regard, we take the support from CESTAT Kolkata decision in the case of Macneill Engineering Ltd. vs. CCE - 2001 (134) ELT 173 (Tri- Kolkata). It is to be noted that value has been defined in Explanation (c) to the Notification No. 8/2003 (supra); therefore, total turnover to decide on eligibility is to claim benefit of Notification No. 8/2003 (supra) to be computed by totalling the value of specified goods only."
He further said that the said decision of the Principal Bench in the above cited case was not challenged by the department and therefore, becomes binding on the department. 4.6 As regard penalty, the learned Counsel submits that when the demand is itself not sustainable, therefore, no penalty can be imposed.
5. On the other hand, the learned Authorized Representative for the Revenue reiterates the findings of the impugned order and submits that Notification No. 8/2003-CE does not contain any provision with regard to the clearance of exempted goods manufactured for other entities, therefore, the appellant is not entitled to the benefits of said notification. He relies on decision of Hon'ble Apex Court in the case of CC (Import), Mumbai vs. Dilip Kumar & Company - 2018 (361) ELT 577 (SC) to say that notification should be strictly construed.
6. After considering the submissions made by both the parties and perusal of the material on record, we find that the department 8 E/56695 & 57088/2013 issued first show cause notice (SCN-1) on 09.04.2009 for the period January 2008 to March 2008 without invoking the extended period of limitation but subsequently on 19.08.2009, the department issued another show cause notice (SCN-2) for the period April 2007 to December 2007 by invoking the extended period of limitation, and both the show cause notices arose out of the same audit report. We find that it is a settled position of law that in a subsequent show cause notice arising out of the same audit report, the allegation of suppression cannot be alleged and extended period of limitation cannot be invoked in view of the various decisions relied upon by the appellant (cited supra in para 4.2).
7. Further, we find that it is a dispute pertaining to interpretation of a condition of the notification and in such circumstances, suppression of facts or contravention of law with intention to evade payment of tax cannot be alleged and this issue is also settled in favour of the assessee in various decisions relied upon by the appellant (cited supra in para 4.3).
8. Further, as regards the condition of the Notification No. 8/2003-CE, we find that if the department's view that such branded medicaments are exempted in terms of Notification No. 4/2006 cannot be accepted inasmuch as the condition 3A(b) refers to the clearance of branded goods which are specifically excluded from the benefit of Notification No. 08/2003. The fact that same are entitled to some other exemption notification, will not change the complexion of the said provisions of (b) of Para 3A of the 9 E/56695 & 57088/2013 Notification and taking the view as advanced by the Revenue, would amount to introduce a new condition or to change the unambiguous wording of such clause, which is not permissible in law. This issue has also been considered by the Principal Bench of the Tribunal in the case of M/s Wenger and Company vs. CCE, Delhi (supra) and has been decided in favour of the assessee. The said decision of the Principal Bench was not challenged by the department, therefore, attained finality.
9. By following the ratios of the above said decisions (cited supra), we are of the considered opinion that the impugned order is not sustainable on limitation as well as on merits and is liable to be set aside and we do so by allowing both the appeals of the appellant with consequential relief, if any, as per law.
(Operative part of the order pronounced in the open court) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) RA_Saifi