Custom, Excise & Service Tax Tribunal
M/S.Panacea Biotech Ltd vs Cce, Chandigarh on 7 August, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI.
Date of hearing/decision:07/08/2013
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982.
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
Excise Appeal No.E/2026/2011-SM (BR)
(Arising out of Order-in-Original No.C.No.IV(16)TECH/103/2005/2775 dated 18.07.2011 passed by the Commissioner of Central Excise (Appeals), Chandigarh)
M/s.Panacea Biotech Ltd. Appellants
Vs.
CCE, Chandigarh Respondent
Appearance: Shri Sadhu Ram, Consultant for the appellant.
Shri P.K. Sharma, AR for the respondent.
Coram : Honble Shri Rakesh Kumar, Member (Technical) Final Order No.57657/2013/Dated:7.8.2013 Per Rakesh Kumar:
In the appellants factory, finished goods involving duty of Rs.2,36,518/- were destroyed due to flood on 3.8.2004. On 22.12.2004, the appellant filed an application to the Commissioner for remission of duty in terms of Rule 21 of the Central Excise Rules, 2002. The Commissioner, however, insisted on reversal of cenvat credit of Rs.34,324/- in respect of the inputs used in the manufacture of finished goods, which had been destroyed in flood and in respect of which remission of duty had been requested. The Commissioner vide order-in-original dated 18.7.2011 allowed the remission subject to condition that the appellant reverse the cenvat credit of Rs.34,325/-. Against this order of the Commissioner this appeal has been filed challenging the condition of reversal of cenvat credit imposed by the Commissioner while granting remission as according to the appellant, during period of dispute, in terms of the Larger Bench decision in the case of Grasim Industries Ltd. Reported in 2007 (208) ELT 336 (T-LB) for claiming remission of excise duty on finished goods destroyed in fire, etc. reversal of input duty credit was not required, which have been destroyed in flood and accident.
2. Heard both the sides.
3. Shri Sadhu Ram, Consultant, ld. Counsel for the appellant, pleaded that the goods had been destroyed in flood in August, 2008 and remission application dated 22.12.2004 has been filed in December, 2004, that during that period, there was no provision in the Cenvat Credit Rules, 2004 for reversal of cenvat credit in respect of the inputs used in the manufacture of finished goods, which were destroyed in flood, fire accident, etc. in respect of which remission of duty had been claimed, that during that period in terms of the Larger Bench decision in the case of Grasim Industries Ltd. (supra) the goods destroyed in any accident in respect of which remission of duty under Rule 21 of the Central excise Rules has been granted are not exempted goods and while claiming remission of duty, reversal of input duty credit is not required, that the same view has been taken by the Honble Punjab & Haryana High Court in the case of Khurana Woolen Mills (P) Ltd. reported in 2013 (289) ELT 153 (P&H), that the specific provision providing for reversal of cenvat credit in respect of the finished goods where the remission of duty had been claimed was made by inserting sub-rule (5 C) of Rule 3 in Cenvat Credit Rules, 2004 w.e.f. 7.9.2007, that this sub-rule cannot be given retrospective effect and that in view of this, the impugned order permitting the remission of duty subject to reversal of input duty credit is not correct and that cenvat credit of Rs.34,325/- already reversed should be ordered to be re-credited.
4. Shri P.K. Sharma, ld. Authorised Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that during the period of dispute i.e. 2004-2005, there was Boards Circular No.800/33/2004-CX dated 1.10.2004 clarifying that reversal of input duty credit was necessary before claiming remission of duty under Rule 21 of the Central Excise Rules in respect of the finished goods destroyed in flood, fire, etc., that inserting of sub-rule 5 (C ) of Rule 3 of Cenvat Credit Rules, 2004 w.e.f 7.9.2007 was of clarificatory nature and that in view of this, there is no infirmity in the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. The goods involving duty of Rs.2,36,518/- had been destroyed in flood in August, 2004 and remission application had been made on 22.12.2004. In terms of the law in force at that time in view of the Larger Bench decision in the case of Grasim Industries Ltd. (supra) for claiming remission of duty under Rule 21 of the Central Excise Rules in respect of the finished goods destroyed in any accident, reversal of input duty credit is not required, as the finished goods in respect of which remission of duty has been allowed are not exempted goods. Same view has been taken by Honble Punjab & Haryana High Court in the case of Khurana Woolen Mills (P) Ltd. (supra) that specific provision providing for reversal of cenvat credit in such a situation was made only by inserting sub-rule 5 (C ) of Rule 3 of the Cenvat Credit Rules w.e.f. 7.9.2007. There is nothing in this sub-rule 5 (C) of Rule 3, from which it can be concluded that it has retrospective effect. In view of this, the impugned order in so far as it imposes the condition of reversal of input duty credit is not sustainable and is liable to be set aside. In the impugned order, the condition of reversal of cenvat credit of Rs.34,325/- is, therefore, set aside. The appeal is allowed with consequential relief.
( Rakesh Kumar ) Member (Technical) Ckp.
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