Custom, Excise & Service Tax Tribunal
Cce, Bhopal vs M/S Aristo Pharmaceuticals Limited on 2 December, 2009
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R. K. Puram, New Delhi COURT-I Date of hearing/decision: 02.12.2009 Excise Appeal No. 145 of 2005 [Arising out of order in Appeal No. 622-CE/BPL/2004 dated 19.08.2004 passed by the Commissioner (Appeals) Customs and Central Excise, Bhopal]. For approval and signature: Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical) ,,,,,,,,,1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982. 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? CCE, Bhopal Appellants Vs. M/s Aristo Pharmaceuticals Limited Respondents
Appearance:
Appeared for the Appellants Shri Anil Khanna, DR Appeared for the Respondents None Coram: Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical) Oral Order Per Shri Justice R.M.S. Khandeparkar:
Heard the learned DR for the appellants. None present for the respondents.
2. A letter has been received from Chartered Accountant Shri Vinod Awtani being the representative of the respondents stating that he is unable to appear before this Court due to personal work therefore, matter should be adjourned to some other date. Apart from saying that he is unable to appear due to personal work, the letter does not disclose any other ground for adjournment of the matter. The matter relates to the year 2005. In the circumstances, we are not inclined to adjourn the matter, as no cogent reason is disclosed for adjournment.
3. The appellants challenge the order dated 19.08.2004 passed by the Commissioner (Appeals), Bhopal whereby the appeal filed by the respondents against the order of the adjudicating authority has been allowed and the modvat credit to the tune of Rs.16,66,361/- has been allowed. The adjudicating authority namely Assistant Commissioner of Bhopal under its order dated 17.09.98 had disallowed the modvat credit to that extent and had imposed penalty of Rs. 5 lakh besides ordering payment of interest.
4. The challenge to the impugned order is on the ground that Commissioner (Appeals) did not appreciate the Notification No. 5/94-CE (NT) dated 01.03.1994 properly and granted benefit of modvat credit in contravention of the said notification.
5. Perusal of the impugned order discloses that the Commissioner (Appeals) allowed the appeal filed before him mainly on the basis of the decision of the Larger Bench in the case of Vikram Ispat vs. CCE, Mumbai-III reported in 2000 (129) ELT 800 (Tribunal- LB). The impugned order in that regard clearly reads thus:-
4.1 I have carefully gone through the records of the case and submission made by the appellant. The basic issue involved in this case is the quantum of modvat credit payable to the appellant in respect of inputs purchased from 100% EOU in terms of Rule 57-A read with Notf. No.5/95-CE(NT) dated 01.03.94. In case of Vikram Ispat V/s CCE, Mumbai-2000 (120) ELT 800 (LB), the Tribunal has clarified that to determine quantum of modvat credit available to the manufacturer in respect of the goods procured from 100% EOU, firstly the additional duty of customs leviable on like goods, if imported into India from outside India is to be ascertained and the actual amount of duty paid by the 100% EOU on the goods cleared to any parts in India under Notf. No.2/95-CENTRAL EXCISE has to be arrived at. After ascertaining these two elements, the modvat credit has to be allowed to the manufacturer on the basis of first proviso of to the Notification No. 5/95-CE. As per first proviso of this Notification, credit shall be restricted to the extent of duty which is equal to the additional duty leviable on like goods.
4.2 The above clarification of CEGAT is squarely applicable in this case. In the instant case the additional duty of customs leviable on like goods if imported into India calculated to be Rs. 3185758/- whereas the appellant has taken credit of duty only amounting to Rs. 3096900/- (Rs.1430539/- plus Rs. 1666361/-) which is lower than the duty actually paid by the 100% EOU as well as limiting factor imposed in the Notf. No. 5/94-CE(NT) dated 01.03.94. Therefore modvat credit of duty total amounting to Rs. 3096900/- is admissible to the appellant. Accordingly penalty imposed is also unwarranted.
6. The Larger Bench in Vikram Ispat case has held thus:-
16. Notification No. 2/95-CE dated 4.1.95 provides that the goods manufactured and cleared by a 100% E.O.U. to DTA will be exempted from so much of duty of excise as is in excess of the amount calculated at the rate of 50% of each of duty of customs leviable read with any other notification for the time being in force on the like goods produced or manufactured outside India, if imported into India provided that the amount of duty payable shall not be less than the duty of excise leviable on like goods produced or manufactured by the units in Domestic Tariff Area read with any relevant notification. It is, thus apparent that notification No. 2/95 provides a minimum limit of the rate of duty which has to be paid by the 100% E.O.U. while clearing the goods to DTA and this limit is provided by the duty of excise leviable on like goods manufactured outside 100% E.O.U. However, if the aggregate of duty customs leviable on goods cleared by 100% E.O.U. is more than the duty of excise leviable on like goods, a 100% E.O.U. has to pay more duty. The Revenue wants to restrict the availment of Modvat credit to the components of additional duty of customs paid under Section 3 of the Customs Tariff Act by bringing the fiction that 100% E.O.U. is a place which is not in India and the sale therefrom within India is akin to import into India. We do not find any substance in this view of the Revenue. The clearance of the goods by 100% E.O.U. are not import in the terms in which it has been defined under Section 2(23) of the Customs Act, according to which import, with its grammatical and cognet expression means bringing into India from a place outside India. This is also apparent from the fact that when the goods are cleared from 100% E.O.U. to any place in India, central excise duty under Section 3(1) of the Central Excise Act is levied and not the customs duty under the Customs Act. If it is to be regarded as import, then the duty has to be charged under Section 12 of the Customs Act, read with Section 3 of the Customs Tariff Act. The Revenue, it seems is confusing the measure of the tax with the nature of the tax. The nature of the duty levied on the goods from 100% E.O.U. is excise duty and nothing else, whereas for determining the quantum of duty the measure adopted is duty leviable under Customs Act as held by the Supreme Court in many cases referred to above. The method adopted by the law makers in recovering the tax cannot alter its character. Once it is held that the duty paid by the 100% E.O.U. in respect of goods cleared to any place in India is excise duty, the question of dissecting the said duty into different components of basic customs duty, auxiliary duty, additional duty of Customs or any other customs duty does not arise. The proforma of AR-1A on which the reliance was placed by the learned D.R., cannot change the legal position that the duty levied on 100% E.O.U. is a duty of excise and not customs duty.
7. Learned DR has also stated that the reference which was made based on the decision of the Larger Bench to the Bombay High Court has been withdrawn vide order dated 7.4.2005 passed by the Bombay High Court in Central Excise Application No. 27 of 2001. Admittedly, the department has not challenged the decision of the Larger Bench in Vikram Ispat case and obviously the same is binding. As the impugned order has been passed entirely on the basis of the decision in Vikram Ispat case, we find no case for interference therein. Appeal therefore, fails and is hereby dismissed.
(Justice R.M.S. Khandeparkar) President (Rakesh Kumar) Member (Technical) /Pant/