Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S.Orchid Health Care on 31 August, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/426/2003 and E/CO/13/2004
[Arising out of Order-in-Appeal No.1/03 M IV dated 10.04.2003 passed by the Commissioner of Central Excise (Appeals), Chennai]
For approval and signature:
Honble Ms. JYOTI BALASUNDARAM, Vice-President
Honble DR. CHITTARANJAN, Technical Member
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 the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise, Chennai
Appellant
Versus
M/s.Orchid Health Care
Respondents
Appearance :
Shri V.V. Hariharan, JCDR Shri R. Raghavan, JCDR For the Appellant For the Respondents CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Honble Mr.Chittaranjan Satapathy, Technical Member Date of hearing : 31.08.2009 Date of decision : 31.08.2009 Final Order No.____________ Per Jyoti Balasundaram The respondents herein were availing CENVAT credit on the inputs received from M/s.Orchid Health Care and manufacturing P or P medicaments. On verification of availment of credit by them on the inputs supplied by 100% EOU, it was observed that the assessee had been availing credit at a flat rate of 16% adv. out of the total duty paid on the inputs supplied by the 100% EOU. The said availment of the credit was irregular for the reason that as per Notification No. 2/95 dated 04.01.1995 credit of duty in respect of inputs supplied by 100% EOU is restricted to the actual amount of additional duty of customs paid on such inputs and since it was noticed that the respondents took credit at a flat of 16% adv. irrespective of the fact that the actual additional duty on inputs was less than 16%, a show-cause notice dated 05.04.2002 was issued proposing disallowance of wrongly availed credit of Rs.1,85,288/- together with appropriate interest and proposing imposition of penalty. The notice was adjudicated by the Assistant Commissioner confirming the demand together with interest but penal proceedings initiated in the notice were dropped. The Commissioner (Appeals) held that the respondents were eligible to credit in the light of the decision of the larger Bench of the Tribunal in the case of Vikram Ispat Vs. CCE 2000 (120) ELT 800. Hence this appeal by the Revenue.
2. It is brought to our notice by the learned JCDR that as per the larger Bench decision credit can be availed only upto 16% adv. but the respondents have availed it in excess of 16%. The larger Bench decision lays down the method to be adopted for determining the quantum of MODVAT credit available to the manufacture in respect of goods procured from a 100% EOU namely (i) ascertainment of additional duty of customs leviable on like goods if imported into India from outside India; (ii) ascertainment of actual amount of duty paid by the 100% EOU on the goods cleared to any part in India under Notification No. 2/95 and (iii) after ascertaining these above two elements the MODVAT credit has to be allowed to the manufacturer on the basis of the first proviso to Notification No.5/94-CE which restricts credit to the extent of duty equal to the additional duty leviable on like goods. The lower appellate authority has not applied the methods laid down in the above larger Bench decision while holding that the respondents are eligible to credit. The working out/re-determination of the extent of credit admissible to the respondents is an exercise to be carried out by the adjudicating authority for which purpose we remit the case to the Assistant/Deputy Commissioner after setting aside the impugned order. He shall pass fresh orders on the amount of credit admissible to the respondents after extending a reasonable opportunity to them on being heard.
3. The appeal of the Revenue is thus allowed by way of remand.
4. As regards the cross objection, we find that the contention of the assessees that the extended period of limitation is not available to the department for the reason that they were admissible under bonafide belief and, therefore, could not be held guilty of suppression with intention to evade payment of duty, merits acceptance as we note that the adjudicating authority himself has accepted that the assessees/respondents had taken credit under a bonafide belief that they were entitled to credit on account of the decision of the Tribunal In Pepsico India Holdings Ltd. Vs Commissioner of Central Excise, Mumbai-II [2001 (130) E.L.T.951 (Tri.-Mumbai)]. Therefore, requantification of duty payable within the normal period of limitation alone is required to be carried out by the adjudicating authority to whom we have already remitted the case. No requantification is called for, for the period beyond the normal period of limitation. The cross objection is, therefore, allowed.
(Dictated and pronounced in open court)
(DR. CHITTARANJAN SATAPATHY) (JYOTI BALASUNDARAM)
TECHNICAL MEMBER VICE-PRESIDENT
ksr
02-09-2009
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