Custom, Excise & Service Tax Tribunal
M/S Lupin Limited vs Cce, Bhopal on 14 June, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV DATE OF HEARING : 14/06/2016. DATE OF DECISION : 14/06/2016. Excise Appeal No. 3003 of 2007 [Arising out of the Order-in-Original No. 34/COMMR/CEX/2007 dated 31/08/2007 passed by The Commissioner of Customs & Central Excise, Bhopal.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would 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 :Seen copy of the order? 4. Whether order is to be circulated to the :Yes Department Authorities? M/s Lupin Limited Appellant Versus CCE, Bhopal Respondent
Appearance Shri B.L. Narsimhan, Advocate for the appellant.
Shri Yogesh Agarwal, Authorized Representative (DR) for the Respondent.
CORAM: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Final Order No. 52172/2016 Dated : 14/06/2016 Per. V. Padmanabhan :-
The appeal is directed against the order of the Commissioner, Bhopal dated 31/08/2007.
2. The appellant is engaged in the manufacture of P&P Medicines and had a DTA unit situated at 198-202, New Industrial Area No. 2, Mandideep, Bhopal. In the middle of 2006 the appellant reorganized a part of the assets of their DTA unit into :
(1) a new 100% EOU in the name and style of EOU-Oral and (2) merged some portion of the original unit alongwith another existing 100% EOU in the name and style of EOU-Pril.
Some of the capital goods in which Cenvat credit was availed in the original DTA unit was segregated as part of the two EOUs, as above. Even though there was no removal of capital goods from the original DTA factory, the demand to the tune of over Rs. 1 crore was confirmed in the impugned order towards reversal of Cenvat credit under Rule 3 (5) of the Cenvat Credit Rules, 2004 which reads as follows :-
When inputs or capital goods, on which Cenvat credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9.
3. The appellant has challenged this demand mainly on the following points :-
(1) Since there was no removal of capital goods when a portion of the appellants factory was converted into 100% EOU, the provisions of Rule 3 (5) of the Cenvat Credit Rules, 2004 will not be attracted. The CBEC Circular No. 77/99-Cus. dated 18/11/1999 which has been relied upon by the Adjudicating Authority is no longer relevant in as much as Cenvat credit is allowed even under the 100% EOU Scheme ;
(2) They have placed reliance among others on the following decisions :-
(i) Privi Organics Ltd. vs. CCE, Raigad reported in 2015 (324) E.L.T. 611 (Tri. Mumbai) ;
(ii) Sun Pharmaceuticals Indus. Ltd. vs. CCE, Pondicherry reported in 2010 (251) E.L.T. 312 (Tri. Chennai) ;
(iii) CCE, Belapur vs. Sandoz Pvt. Ltd. reported in 2013 (291) E.L.T. 325 (Bom.) ;
(iv) CCE, Rajkot vs. Ashok Iron & Steel Fabricators reported in 2002 (140) E.L.T. 277 (Tri. LB) and
(v) CCE, Vapi vs. Raveshia Colours Pvt. Ltd. reported in 2013 (292) E.L.T. 96 (Tri. Ahmd.).
4. We have heard Shri B.L. Narsimhan, learned Advocate for the appellant as well as Shri Yogesh Agarwal, learned DR for the Revenue. Rule 3 (5) of the Cenvat Credit Rules contemplates payment of an amount equal to the credit availed in respect of inputs and capital goods when such goods are removed as such from the factory. The thrust of the appellants argument is that the removal contemplated in the above Rule is the physical removal, of the inputs or capital goods on which credit is taken, from the factory of the manufacturer. In the present case in as much as the inputs and capital goods were not removal physically from the factory and, hence, the mischief of Rule 3 (5) will not be invited. We find considerable force in the argument advanced by the appellant. We also find that the issue is no longer res-integra in as much as identical issue has been considered time and again and decided in favour of the appellants by this Tribunal. In the case of Privi Organics Ltd. vs. CCE, Raigad reported in 2015 (324) E.L.T. 611 (Tri. Mumbai), the Tribunal had occasion to consider an identical matter. The Tribunal has also considered CBEC Circular No. 77/99-Cus. dated 18/11/99. The operative part of the decision is as follows :-
5.?We find that this issue has already been decided by this Tribunal in the case of Sandoz Pvt. Ltd. v. CCE - 2011-TIOL-673-CESTAT-MUM. = 2012 (278) E.L.T. 259 (Tri.). The said order of the Tribunal has been upheld by the Honble High Court of Bombay as reported in 2012-04-LCX-02-05. We also note that based upon the said judgment this Tribunal in the case of Matrix Laboratories Ltd. v. CCE - 2014-TIOL-2090-CESTAT-MUM. = 2015 (316) E.L.T. 168 (Tri.-Mum.) has also taken similar view. In the said judgment this Tribunal has observed as under : -
5.1?We observe that there is no bar for transfer of credit available in the books of accounts on the date of conversion of a unit in DTA into 100% EOU under Rule 10 of the Cenvat Credit Rules, 2004. In the absence of any specific prohibition denying the transfer of credit, the appellants are rightly entitled to transfer of the same. The decision of the Honble Bombay High Court in the case of Sandoz Pvt. Ltd., and of the Tribunal decision in the case of Watson Pharma Pvt. Ltd. (supra) confirm the above view. Accordingly, the appellant is entitled to transfer of credit lying in the books of accounts at the time of conversion from DTA to 100% EOU and therefore the impugned demands are not sustainable. Thus, the appeal is allowed with consequential relief, if any.
6.?In view of the above position, we do not find any merits in the contention of the Revenue. We also note that the Board Circular No. 77/99-Cus. quoted does not elaborate under what provision the unutilised credit will stand lapsed. In any case, the said circular was issued when Rule 100H under old Central Excise Act, 1944 were existing and at that point of time 100% EOU were outside the scheme of modvat/Cenvat credit, which is not so after the CENVAT Credit Rules, 2004 have come into existence. The present case is pertaining to the period after 2004. We have also seen the Tribunals judgment in the case of Indira Gandhi Mahila Sahakari Soot Girni Ltd. (supra), the facts of that case are entirely different and that case pertain to the time when the old rules were in existence, and therefore not applicable to the present facts of the case. On limitation also we find the appellant has strong case as when unit got converted in EOU all details of unutilised credit, etc., were made known to the department and revenue after five years cannot allege that there was wilful misstatement or suppression of fact.
7.?Under the circumstances, we allow the appeal filed by the appellant both on merits as well as limitation.
5. Similar views have also been expressed by the Tribunal in so many other cases for example Sun Pharmaceuticals Indus. Ltd. vs. CCE, Pondicherry reported in 2010 (251) E.L.T. 312 (Tri. Chennai).
6. In as much as EOUs are entitled to take as well as utilize Cenvat credit on inputs as well as capital goods, for payment of duty on the DTA clearances, the demand of duty made in the impugned order, if paid, will be available as Cenvat credit to the 100% EOUs. This leads us to Revenue neutral situation.
7. In line with the above discussions, we allow the appeal.
(Operative part of the order pronounced in the open court.) (Archana Wadhwa) Member (Judicial) (V. Padmanabhan) Member (Technical) PK ??
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