CIPLA Limited Vs Commissioner of C.G.S.T. and Central Excise (CESTAT Kolkata)
CESTAT Kolkata set aside the Central Excise demand of Rs. 3,41,15,506, along with applicable interest and equivalent penalty under Section 11AC of the Central Excise Act, 1944, against Cipla Limited. The dispute concerned suo motu re-credit of annual differential refunds for FYs 2011-12 to 2013-14 under Notification No. 20/2007-CE dated 25.04.2007, as amended by Notification No. 38/2008-CE dated 10.06.2008.
Cipla was availing the area-based exemption and had opted for the prescribed mechanism of monthly self-credit. Paragraph 4 of the Notification provided for refund of the differential amount where the annual eligible refund exceeded the monthly refunds already obtained, with the refund required to be sanctioned by the jurisdictional Assistant Commissioner or Deputy Commissioner by 15 May of the subsequent financial year.
For FYs 2011-12, 2012-13 and 2013-14, Cipla submitted applications and, after the prescribed dates for sanction had expired without departmental action, took suo motu credit of the differential amounts in its PLA. The credits were Rs. 1,48,56,777, Rs. 88,36,321 and Rs. 1,04,22,408, respectively. Cipla also intimated the Department through letters and disclosed the credits in its monthly duty payment statements.
A CERA audit subsequently raised an objection, and a Show Cause Notice dated 08.09.2016 proposed recovery of the entire amount with interest and equivalent penalty by invoking the extended period of limitation under Section 11A(4)(e) of the Central Excise Act.
Before the Tribunal, Cipla principally argued that the Department had complete knowledge of the suo motu credits since the applications, monthly statements and communications had disclosed the transactions. It therefore contended that there could be no suppression or mala fide intent justifying invocation of the extended limitation period.
CESTAT Kolkata noted that the relevant refund claims were required to be sanctioned by 15.05.2012, 15.05.2013 and 15.05.2014, respectively, but no action was taken by the Revenue. Cipla thereafter took the self-credits in August 2012, June 2013 and June 2014, and disclosed the credits in its monthly duty payment statements. The Department was also expressly informed through letters dated 07.05.2012, 15.05.2013 and 29.04.2014.
The Tribunal further found that the Revenue had not disputed Cipla’s entitlement to the refund claims. Since all relevant facts were already within the Department’s knowledge, the Revenue failed to produce evidence establishing suppression, fraud or mala fide intent to evade payment of duty. Accordingly, the extended period of limitation could not be invoked.
CESTAT Kolkata held that the Show Cause Notice dated 08.09.2016 was highly barred by limitation and, consequently, no proceedings could be sustained against Cipla. The impugned order was set aside and the appeal was allowed with consequential relief, if any. The Revenue’s cross-objection was disposed of accordingly.
FULL TEXT OF THE CESTAT KOLKATA ORDER
