Custom, Excise & Service Tax Tribunal
Arch Pharmalabs Ltd. vs Cce Belapur on 31 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
REGIONAL BENCH - COURT NO. 504
Excise Appeal No. 810 of 2011
(Arising out of Order-in- Original No. Belapur/46/TAL/R-1/Commr.SLM/10-11
dated 15/03/2011 passed by the Commissioner of Central Excise, Belapur.)
M/s Arch Pharmalabs Ltd. ........Appellant
VERSUS
Commissioner of Central ........Respondent
Excise, Belapur APPERANCE:
Shri Yogesh S. Patki, Advocate for the Appellant Shri N.N. Prabhudesai, Supdt. Authorised Representative for the Respondent CORAM:
HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO. A/86012 / 2019 Date of Hearing: 14/02/2019 Date of Decision: ...........2019 PER: P. ANJANI KUMAR The Appellants, M/s. Arch Pharma Labs, are engaged in the manufacture of excisable goods falling under Chapter 29 of Central Excise Tariff Act, 1985. They have availed Cenvat Credit of inputs, Capital goods and Input Services during the years 2006 -07 and Printed by BoltPDF (c) NCH Software. Free for non-commercial use only. 2
th dated 29 March, 2019 alleging that the availment of Cenvat Credit by the Appellants was incorr ect as no dutiable goods have been manufactured and cleared by them. The show cause notice was confirmed by Commissioner of Central Excise, Belapur, vid e order dated 14.03.2011. Hence, this appeal.
2. Learned Counsel for the Appellants submits that the Appellant was registered as a Central Excise manufacturer and at the time of receipt of inputs, capital goods and input services there was no bar on them to avail that credit of Cenvat paid by them; that they have not been alleged to have contravened any provisions of Rule 3 or 4 of Cenvat Credit Rules, 2004 ;total credit availed by them during the impugned period was Rs. 1,12,70,283/ - ; the Appellant was regularly filing returns and disclosed the fact of availment of credit . The Counsel further submits that during the period they came to know that there is an exemption notification no. 167/71 dated 11.09.1971 in respect of clearances by units engaged in Research & Development Activities; the Appellants ac cordingly informed the department about availment of the notification; an audit of the records of the unit was conducted and as advised by the Audit they have reversed Rs. 98,96,860/ - . The Appellants contend that Cenvat availed by them was in accordance wi th law, they have relied upon in the following cases:
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non-commercial 3 2.1 . The Counsel for the Appe llants further submits that the audit query was raised in July 2008 and statement of the company officers was recorded in 2008 itself. Department had full knowledge of the activity of the Appellants and therefore, show cause notice issued in 2010 is barred by time as no suppression can be alleged. They relied upon the following cases:
(i) Fedders Lloyd Corporation vs. CCE (Tribunal) 149 ELT 1426
(ii) Maruti Udyog Ltd. vs. CCE (Tribunal 147 ELT 881
(iii) Gopal Zarda Udyog vs. CCE (Supreme Court) 188 ELT 251
(iv) Anand Nishikawa vs. CCE (Supreme Court) 188 ELT 149
(v) Hindustan Copper vs. CCE (Tribunal) 138 ELT 514
(vi) Marmago Steel Ltd. vs. CCE (Tribunal) 137 ELT 381
(vii) Shree Renuka Sugars Ltd. vs. CCE(Tribunal) 210 EL T 385
(viii) CCE v. Syncom Formulation Ltd.(Tribunal) 172 ELT 77
(ix) Trinity Auto Components vs. CCE(Tribunal) 257 ELT 548
(x) Nizam Sugar Factory vs. CCE(Supreme Court) 197 ELT 465
(xi) Prasad Polypack vs. CCE(Tribunal) 224 ELT 326
(xii) CCE vs. Aruna S teels Ltd. (Tribunal) 230 ELT 325 2.2 The Counsel submits that as there is no mis - statement suppression penalty cannot be imposed under Rule 15 of Cenvat Credit Rules read with Section 11 AC. He also contented that there is no duty payable by them and hen ce no penalty is imposable. He relied upon following cases:
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(iv) CCE vs. Jyoti Structures (Tribunal) 24 7 ELT 555
(v) CCE vs. HMM Ltd (Supreme Court) 76 ELT 497
(vi) H. Guru Investment vs. CEGAT (All. H.C.) 104 ELT 8
3. Learned Authorised Representative for the Department reiterated the findings of OIO and relied upon (i) Union of India vs. Ind - Swift Labo ratories Ltd. 2012 (25) STR 184 (SC) and (ii) Commissioner of C. Ex, Chandigarh vs. Sona Paper Boards Ltd. 2014 (313) ELT 721 (Tri. - Del)
4. Heard both sides and perused the records of the case. The brief issue requiring decisions in this case is as to whe ther the Appellants are required to reverse the Cenvat Credit availed by them in view of the fact that they have not cleared any final products on payment of duty and for the reason that they have surrendered that registration. Other issues to be decided a re as to whether penalty can be imposed on the Appellant. Coming to first issue the Appellants submit that they have complied with the provisions of Rule 3 and 4 of Cenvat Credit Rules and that show cause notice does not allege that they have not complied with he find that the show cause notice is issued for failure of the Appellant in discharging the obligations cast upon them under Rule 6 of Cenvat Credit Rules, 2004. Learned Commissioner observed that sub - Rule (1) of Rule 6 of Cenvat Credit Rules, 2004 i s applicable to the instant case, as the Appellants are Printed by BoltPDF (c) NCH Software. Free for non-commercial use only. 5
"The Cenvat Credit shall not be allowed on such quantity of [input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance up t o the place of removal or for provision of exempted services], except in the circumstances mentioned in Sub - Rule 2."
4.1. From the above, it is clear that the Cenvat credit is not allowed on such quantity of used in the manufacture of exempted goods, unde rstandably in the case where some dutiable and some exempted goods are manufactured. In the instant case, as all the goods manufactured are cleared without payment of duty availing the exemption contained in Notification No. 167/71 dated 11.09.1971, it goe s without saying that the entire credit is not available to the appellants. Having taken/availed the credit the appellants are liable to reverse the credit or pay the balance required if any. Availment or utilization of Cenvat Credit is subject to the CCR, 2004. Even for argument sake it is accepted that they have correctly taken or availed credit the appellants are not eligible to credit on that portion of goods which are cleared without payment of duty. In the instant case we find that all the goods were cleared without payment of duty and therefore, the credit taken or availed is not due to them and therefore, is payable/reversible as the case may be. When there is a clear provision in the CCR, 2004 expressing the inadmissibility of Credit on the goods c leared without payment of duty, one need not take recourse Printed to by interpretations.
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19. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court i n Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd . reported in (1961) 2 SCR 189 wherein this Court at Para 10 has observed as follows : -
"10. ....... In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not e xpressed; it cannot import provisions in the statutes so as to supply any assumed deficiency."
20 . Therefore, the attempt of the High Court to read down the provision by way of substituting the word "OR" by an "AND" so as to give relief to the assessee is found to be erroneous. In that regard the submission of the counsel for the appellant is well - founded that once the said credit is taken the beneficiary is at liberty to utilize the same, immediately thereafter, subject to the Credit rules.
Therefore, we do not find any merit in the appellants' claim that they have not contravened any provisions of Rules 3 and 4 of CCR, 2004. We find that the appellants are required to reverse the credit taken/ availed in the current instance.
4.2. Coming to the issue of Limitation, the appellants have argued that the investigations were conducted in 2008 and SCN was issued in 2010 hence time barred. We find that commissioner has correctly observed that ratio of the cases cited by the appellants is not applicable as no pe riod of demand is beyond a period of 5 years. The only question that requires to be gone in to is as to whether there was a suppression of fact etc. in the instant case, the appellants Printed by BoltPDF (c) NCH Software. Free for non-commercial use only. 7 It is not the case of the appellants that they have declared beforehand to the department that they are not clearing any goods on payment of duty. Moreover, on conduct of Audit of the appellant's records, the appellants reversed the credit in 2008 itself. The appellants have reversed the Credit, in terms of provisions of Rule 6 of CCR, 2004. The appellants are aware of the provisions as they have themselves reversed credit whenever they have cleared inputs as such. The letter dated 04.08.2008 only mentions that they are reversing the credit on their own, though not agreeable to such reversal. It is not the appellants' case that they have formally registered a protest and followed up with an application of refund afterwards before the issue of Show Cause Notice. Therefore, we find that the appellants have rightly reversed the credit which is not admissible to them in terms of Rule 6 o f CCR, 2004. Having held that the Cenvat credit is reversible/payable by the appellants, payment of interest is a corollary as per statute. We hold that the appellants are liable to pay interest on the inadmissible credit taken / availed by them, being a statutory condition. 4.3. Coming to the issue of penalty, the appellants contended that in the absence of suppression of facts etc . penalty under Rule 15 cannot be imposed. The commissioner finds that for reason of suppression of fact etc . penalty is imposable on them. However, we find that in the instant case Credit has been reversed well before the Printed by BoltPDF (c) NCH Software. Free for non-commercial use only. 8 that the imposition of penalty invoking the provisions of Section 11AC is not warranted. Accordingly, the penalty is liable to be set aside.
5. In the result, we allow the appeal only to the extent o f setting aside the penalty.
(Order pronounced in the court on ....................) (Dr. D.M. Misra ) Member (Judicial) (P. Anjani Kumar ) Member ( Technical ) SB Printed by BoltPDF (c) NCH Software. Free for non-commercial use only.