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TAXAP/2545/2010 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2545 of 2010
=========================================
COMMISSIONER
OF CENTRAL EXCISE, COMMISSIONERATE - Appellant(s)
Versus
M/S
MAAN PHARMACEUTICALS LTD - Opponent(s)
=========================================
Appearance
:
MR YN
RAVANI for
Appellant(s) : 1,
MR PARESH M DAVE for Opponent(s) :
1,
=========================================
CORAM
:
HONOURABLE
MS. JUSTICE HARSHA DEVANI
and
HONOURABLE
MR. JUSTICE H.B.ANTANI
Date
: 16/12/2010
ORAL
ORDER
(Per
: HONOURABLE MS. JUSTICE HARSHA DEVANI)
1. In
this appeal under section 35G of the Central Excise Act, 1944 (the
Act), the appellant – Commissioner of Central Excise, Ahmedabad
has challenged order dated 15th
June, 2009 made by the Customs, Excise and Service Tax Appellate
Tribunal (the Tribunal) proposing the following question:-
“Whether
the Hon’ble Tribunal is right in accepting reversal of credit taken
by the assessee in this case instead of upholding the adjudicating
authorities order to the assessee to pay an amount equal to 8% of
total price of the exempted goods as per the Rules 6(3)(b) of Cenvat
Credit Rules, 2002?”
2. The
respondent assessee is engaged in the manufacture and clearance of P
& P medicines falling under Chapter 30 of the Central Excise
Tariff Act, 1985. Some of the products manufactured by the assessee
are dutiable and some of them are exempted products. The assessee
was availing of modvat credit of duty paid on the raw materials used
in the manufacture of dutiable as well as exempted product. Pursuant
to an audit objection raised against the assessee in respect of
availment of credit on the raw material used in the manufacture of
exempted product, the assessee contended that it was not possible for
it to maintain separate records for the common inputs. However, it
agreed to work on the modvat credit in respect of the inputs used in
manufacture of exempted final product and reverse the credit so
availed by it. Accordingly, modvat credit to the tune of Rs.23,
22,633/- came to be reversed by the assessee alongwith interest of
Rs.4,94,031/-.
3. However,
vide two show-cause notices, proceedings came to be initiated against
the assessee demanding duty of Rs.56,02,225/- and Rs.14,78,366/-
respectively equal to 8% of the total price of the exempted final
goods with interest and penalty. Both the show-cause notices
culminated into an order dated 30th
September, 2005 made by the adjudicating authority who held that
though the issue in question was decided in favour of the assessee by
various decisions of the Tribunal as well as a decision of the
Supreme Court in the case of
M/s. Chandrapur Magnet Wires Ltd., 1996
(81) E.L.T. Page 3 (SC),
in the light of the fact that there was a circular issued
by the Central Board of Excise and Customs wherein it has been stated
that the assessee has no option but to reverse 8% of the price of
exempted products, which was binding upon him, he confirmed the total
demand of Rs.70,80,591/- alongwith interest and penalty of equal
amount. Being aggrieved, the assessee carried the matter in appeal
before the Tribunal who vide the impugned order allowed the appeal.
4. Heard
Mr. Y.N. Ravani, learned Senior Standing Counsel for the appellant
and Mr. Paresh Dave, learned advocate for the respondent.
5. Mr.
Ravani, learned Senior Standing Counsel has reiterated the reasoning
adopted by the adjudicating authority and has submitted that in the
light of the provisions of rule 6 of the Cenvat Credit Rules, 2002,
it was incumbent upon the assessee to either maintain separate
accounts or pay duty at the rate of 8% in case it did not opt to
maintain separate accounts.
6. On
the other hand, Mr. Paresh Dave, learned advocate for the respondent
has invited attention to the fact that the Tribunal has placed
reliance upon the decision of the Tribunal in the case of M/s.
Chandrapur Magnet Wires Ltd., (supra) as well as a decision of this
High Court in the case of M/s.
Maize Products vs. CCE-II, Ahmedabad, 2007
(79) RLT 662. It is
pointed out that against the decision of the Tribunal in M/s. Maize
Products, revenue had preferred appeal before this Court which came
to be dismissed by the High Court in the case of Commissioner
of Central Excise, Ahmedabad-II vs. Maize Products, 2009
(234) E.L.T. 431 (Guj.).
It was submitted that the decision of the Tribunal being in
consonance with the principles enunciated by this Court as well as
the Supreme Court in the above referred decisions, no case is made
out to warrant any interference.
7. As
can be seen from the impugned order of the Tribunal, the Tribunal has
merely followed the decision of the Supreme Court in the case of M/s.
Chandrapur Magnet Wires Ltd. (supra), as well as a decision of the
jurisdictional High Court in the case of M/s. Maize Products (supra).
In the case of Commissioner of Central Excise vs. Maize Products,
this Court has held as follows:-
“5. The
appellant has produced relevant extracts from the relevant Rule of
Cenvat Credit Rules, 2002 which relates to obligation of manufacturer
of dutiable and exempted products. Under sub-rule (2) of the said
Rules, a manufacturer is required to maintain separate accounts
regarding inputs used for manufacturing of dutiable products and
inputs used for manufacturing of exempted products. However,
sub-rule (3) stipulates that, in a case where the manufacturer opts
not to maintain separate accounts, the manufacturer shall follow
either condition (a) or condition (b), as the case may be. Under the
Rule, Explanation-1 provides that the amount mentioned in any of the
conditions shall be paid by the manufacturer by debiting the Cenvat
credit or otherwise.
6. Thus,
in effect, the directions issued by the Tribunal are merely in
consonance with the requirement of the relevant rule, and it is not
possible to state that the Tribunal has committed any error in
issuing such directions. The respondent assessee having accepted
before the Tribunal to reverse the Cenvat credit as recorded by the
Tribunal in paragraph No.4 of the impugned order as regards reversal
of the amount involved and any more amount that may be reversible,
the Tribunal has issued directions accordingly.”
8. Examining
the impugned order of the Tribunal in the light of the aforesaid
decision of this Court, it is not possible to state that the Tribunal
has committed any legal infirmity so as to warrant interference. In
the circumstances, no question of law, much less, a substantial
question of law can be stated to arise out of the impugned order of
the Tribunal. The appeal is accordingly dismissed.
(
Harsha Devani, J. )
(
H.B. Antani, J. )
hki
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