Custom, Excise & Service Tax Tribunal
Cadila Pharmaceuticals Ltd vs Ahmedabad-Iii on 3 January, 2019
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No. E/885/2010-DB
[Arising out of OIA-91-2010-AHD-III-KCG-CE-COMMR-A dated 14.05.2010 passed by
Commissioner of Central Excise-AHMEDABAD-III]
M/s Cadila Pharmaceuticals Ltd Appellant
Vs
C.C.E. & S.T.,- Ahmedabad-iii Respondent
Represented by:
For Appellant: Shri S.J. Vyas (Advocate) For Respondent: Shri G. Jha (AR) CORAM:
HON'BLE SHRI RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 30.11.2018 Date of Decision: 03.01.2019 Final Order No. _A/ 10034__/2019 Per: Ramesh Nair The brief facts of the case are that the appellant are engaged in the manufacture of excisable goods falling under chapter 29 and 30 of the schedule to the Central Excise Tariff Act, 1985. They availed the facility of cenvat credit under Cenvat Credit Rules, 2004. During the audit, it was noticed that the appellant have imported goods namely, "Sulfolane Anhydrus" and taken cenvat credit of the duty paid on the same. They have cleared the said input raw-material as such under their Central Excise Invoices and under CT-3 as their final product on payment of central excise duty without undertaking any process of the same. The duty so paid on the said inputs is less than the total cenvat credit availed. Therefore, the case of the department is that since the imported input sold as such on which credit was taken, the appellant is require to reverse the actual cenvat credit. Accordingly, the differential duty demand between cenvat credit availed and duty paid has been
2|Page E/885/2010-DB confirmed by the original authority. Being aggrieved by the order in original dated 08.01.2010, the appellant filed appeal before Ld. Commissioner (Appeals) which came to be rejected and order in original was upheld, therefore, the present appeal.
2. Sh. S.J. Vyas Ld. Counsel appearing on behalf of the appellant submits that the issue on merit has been settled against the appellant in the case of CCE Vs. M/s Amritlal Chemaux Ltd. 2015 (321) ELT 5 (SC). He submits that he confine his argument heavily on limitation. In this regard he submits that the issue involved is of interpretation of Chapter Note of Chapter 29 that whether the activity of re-packing and re- labelling is amount to manufacture or otherwise. There were various cases made out on the same issue and finally it is settled in Supreme Court, therefore in the case of interpretation of law, the malafide intention cannot be attributed to the appellant, hence, the demand raised invoking extended period is time bar. He submits that the appellant has declared the availment of cenvat credit and payment of duty on the re-packed/re-labelled goods for which appellant had bonafide belief that the activity is amount to manufacture; therefore, there is no suppression of fact on the part of the appellant. He also submits that even the Board vide Circular No. 576/13/2001-CX dated 16.05.2001 opined that in view of similar Chapter Note 5 of Chapter 30 of Central Excise Tariff Act, 1985, the activity of putting label on the container will amount to manufacture.
3. On the other hand, Sh. G. Jha Ld. Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He placed reliance on the judgment of Casil Industries Ltd. Vs. CCE, Tribunal order No. A/1581/WZB/AHD/2011 dated 26.08.2011 and in the
3|Page E/885/2010-DB case of Sika India Pvt. Ltd. Vs. CCE, Goa 2018 (361) ELT 1033 (Tri.Mum.)
4. We have carefully considered the submissions made by both the sides and perused the records, we find that as regard the merit of the case, the issue is no more under dispute as in terms of Chapter Note 10 of Chapter 29 which reads as under:
"10. In relation to products of this Chapter, labelling or relabeling of containers and repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to 'manufacture'.
From the above chapter Note, it is clear that re-packing/re-labelling activity which was carried out by the appellant alone will not amount to manufacture but along with re-packing/re-labelling there should be an activity i.e. conversion from bulk pack to retail pack to render the product as manufactured goods. This issue has been settled in the case of M/s Amritlal Chemaux Ltd (Supra) wherein the identical Chapter Note has been dealt with and the Hon'ble Supreme Court held that the activity of re-packing/re-labelling alone does not amount to manufacture. Accordingly, the appellant's activity being only re- packing/re-labelling of imported goods does not amount to manufacture, therefore, the clearance of such goods shall be correctly treated as removal of input as such. In this position the appellant was required to pay the duty equal to the cenvat credit availed on such inputs, whereas, the appellant have paid lesser duty on transaction value treating the re- packing/re-labelling as manufacture activity, therefore, the demand on merit is correct. However as regard the issue of limitation, we find that it is not only the appellant but also department throughout in the case of M/s Amritlal Chemaux Ltd (Supra) and even in the case of CCE,
4|Page E/885/2010-DB Mumbai Vs. Johnson & Johnson Ltd. 2005 (188) ELT 467 (SC) taken a stand that the activity similar to the activity carried out by the appellant is amount to manufacture. The issue was finally settled by the Hon'ble Supreme Court, therefore, when the department itself was of the view that the activity of re-packing/re-labelling alone is amount to manufacture. The same bonafide belief was entertained by the appellant which cannot be construed as malafide intention to evade the payment of duty, therefore, the demand for the extended period cannot be raised.
5. In the present case, demand of the period 2006-07 to 2007-08 was raised by SCN dated 16.02.2009, therefore, the entire demand is under extended period, hence the same will not sustain on the ground of limitation. Accordingly, we set aside the impugned order only on the ground of limitation. Appeal is allowed.
(Pronounced in the open court on 03.01.2019)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
Seema