Custom, Excise & Service Tax Tribunal
M/S Ranbaxy Laboratories Limited vs Cce, Indore on 4 October, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Date of hearing: 27.09.2016 Date of pronouncement: 04.10.2016 Excise Appeal No. 540 of 2009 (Arising out of order-in-original No. 54/COMMR/CEX/IND/08 dated 05.12.2008 passed by the Commissioner of Customs & Central Excise, Indore). M/s Ranbaxy Laboratories Limited Appellant Vs. CCE, Indore Respondent
Appearance:
Sh. B. L. Narasimhan, Advocate for the appellant Sh. Yogesh Agarwal, AR for the Respondent. Coram:
Honble Justice (Dr.) Satish Chandra, President Honble Shri B. Ravichandran, Member (Technical) Final Order No. 53929 / 2016 Per: B. Ravichandran:
The appeal is against order dated 05.12.2008 of Commissioner of Central Excise, Indore. The appellants are engaged in the manufacture of P&P medicaments and bulk drugs liable to Central Excise duty. One of the products manufactured by the appellant is non-dutiable. In terms of Cenvat Credit Rules, 2004, the appellants have to maintain separate cenvat credit accounts for dutiable and exempted final products or reverse proportionate credit attributable to exempted goods. In January, 2008, the Department conducted certain verification of records of the appellant. Thereafter in terms of Cenvat Credit Rules 6 the appellants reversed the credit attributable to the exempted / non-dutiable goods. However, the department issued show cause notice in May, 2008 invoking extended period to appropriate the amount already reversed, to demand interest and to impose penalty. The original authority disallowed credit of Rs.53,65,477/- and appropriated amount already reversed by the appellant. He also ordered for payment of interest and imposed equal amount of penalty on the appellant. The present appeal is against the interest and the penalty only.
2. Ld. Counsel for the appellant submitted that when they have reversed the disputed amount much before the issue of show cause notice there is no ground to impose any penalty on them. Further, they had always substantial credit balance, much higher than the disputed amount, and hence there is no question of interest liability on the reversed amount.
3. Ld. AR reiterated the findings of the lower authorities.
4. We have heard both the sides and perused appeal records. The admitted facts are that the appellant reversed the credit amount and intimated the department. Show cause notice was issued much after, invoking extended period. We note that the credit availed by the appellants are all on various services. Some of which were covered under Rule 6(5). The appellant having reversed the credit before issue of the notice pleaded for bonafide error on their part. We note that the turnover of exempted goods is around 1% to 2% of the total turnover during the impugned period. Further, admittedly, the appellant had substantial credit, much higher than the disputed amount, at any given time in their books of accounts. Considering these facts, we find no justification to take penal action against the appellant. Imposition of equal amount of penalty is not justifiable in the facts of the present case.
5. Regarding demand of interest on the reversed cenvat credit, we note that the appellant had always sufficient balance in their credit account and the amount of disputed credit has never been used to discharge the duty liability. Accordingly, following the decision of the Tribunal in Grasim Bhiwani Textiles Ltd. vs. CCE, Rohtak 2016 (332) ELT 865 (Tri. Del.) wherein the decision of the Honble Karnataka High Court in Commissioner vs. Bill Forge Pvt. Ltd. 2012 (279) ELT 209 (Kar.) was relied upon, we find the demand for interest in such situation is not justifiable.
5. In view of the above discussions and analysis, we set-aside the impugned order with reference to confirmation of interest and imposition of penalty. The appeal is allowed to that extent.
(Pronounced on 04.10.2016).
(Justice (Dr.) Satish Chandra)
President
(B. Ravichandran)
Member (Technical)
Pant