Case Law Details
Commissioner of Central Excise & ST, Surat Vs Sanofi India Limited (CESTAT Ahmedabad)
CESTAT find that the only grievance of the Revenue in their appeal is that learned Commissioner (Appeals) should not have entertained the appeal against the letter written by Superintendent. In this regard we find that there is no dispute that appellant have sought allowance of credit in respect of input service attributed to dutiable goods which was very much in accordance with the Cenvat Credit Rules. The Superintendent vide letter dated 25.09.2012 denied the benefit claimed by the appellant assessee. It is also stated in the said letter that in case of availment of credit which was claimed by the appellant, penal action shall be taken against the respondent. The said letter therefore is clearly a decision given by a proper officer.
From the plain reading of Section 35 of Central Excise Act, 1944, it is clear that any decision or order passed by a proper officer below the rank of Commissioner is appealable before Commissioner (Appeals). Accordingly there is absolutely no ambiguity in Section 35. The letter whereby the Superintendent has clearly held that respondent is not eligible to take credit, the said letter is clearly a decision against which appeal lies before Commissioner (Appeals) as per the strict interpretation of Section 35. We also notice that if the department’s contention is accepted then the respondent left with no remedy against denial of substantial benefit claimed by the respondent and respondent is remediless.
In view of our above observation, we are of clear opinion that in the facts of the present case the letter written by Superintendent is a decision against which the appeal lies before Commissioner (Appeals) under Section 35 of the Act. Accordingly, the order of the Commissioner (Appeals) is absolutely legal and correct hence the same is upheld.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the respondent are engaged in the manufacture of bulk drugs as well as tablets. They also import various drugs formulations and repacking them in a smaller size and clear the same by discharging excise duty. The unit is registered with the Central Excise department. They also have an in-house medical centre which renders medical facilities to the employees of the company and at times other neighboring manufacturing units also avail medical facilities from the said centre. The respondent are receiving various duty paid inputs and capital goods and input services. The respondent are also having plant for Nitrogen, Steam plant, Chilling unit and compressed air unit for use in the manufacturing process. These facilities are also shared by the respondent with neighbouring units like Bayer Corp Science and Novartis. For manufacturing of final products the respondent are using common facilities/ machineries as well as common input services for the manufacturing of drugs which are both dutiable and exempt. Thus, the respondent are using the services both for dutiable as well as exempted operations but they have not maintained separate books of accounts for receipt and payment of input services.
2. The respondent received a show cause notice in 2007 on account of Cenvat credit of service tax paid on input services availed by them. The show cause notice alleged that the respondent cannot avail the Cenvat credit of service tax paid on all input services because said services are used for both types of goods i.e. dutiable as well as exempted. So, the respondent have not been availing Cenvat credit of the service tax paid on such input services since the Financial Year 2007-08. Since then the respondent availed Cenvat credit only of the credit passed to it by the Input Service Distributor which is the head office of the Company. The respondent desired to avail Cenvat credit of the input services for the Financial Year 2007-08 to 2011-12. The respondent thus calculated the amount of Cenvat credit eligible for the respective Financial Year as per the provisions applicable in the relevant financial year. The respondent first identified the services which were received by the Company and on which service tax was paid and which satisfied the definition of ‘input service’ under Rule 2(l) of Cenvat Credit Rules, 2004. The respondent then identified the services that were used for both dutiable as well as exempted goods. The respondent calculated the eligible credit under Rule 6(5) and then calculated the proportionate credit eligible after considering reversal as required under Rule 6(3) for common input services. After such calculation, the respondent filed intimation for availing Cenvat credit dated 21.09.2012 for each of the financial years to the department.
3. The respondent received a letter dated 25.09.2012 from the Superintendent, Central Excise & Customs, Range-1, Division-II, Vide the said letter the respondent were directed not to avail the Cenvat credit for the period 2007-08 to 2011-12 as mentioned in the respondent’s letter. The letter dated 25.09.2012 further stated that recovery action along with penal actions would be initiated if the respondent availed/ utilized the credit. Being aggrieved by the letter dated 25.09.2012 issued by Superintendent, Central Excise & Customs, Range-1, Aknkleshwar directing respondent not to avail Cenvat credit on various input services for the period 2007-08 to 2011-12, the respondent filed appeal before Commissioner (Appeals) making elaborate submissions for setting aside the letter dated 25.09.2012 along with consequential relief to the respondent. Learned Commissioner (Appeals), after considering all the submissions made on behalf of the respondent allowed the appeal vide OIA No. CCEA-SRT-IISSP-242-U-S-35-A dated 17/22.01.2013 (hereinafter referred to as impugned order). Being aggrieved by the impugned order dated 22.01.2013 in so far as it is against the appellant-Revenue, the Revenue preferred the present appeal challenging the impugned order.
4. Shri Ghanasyam Soni, learned Addl. Commissioner (AR) appearing on behalf of the Revenue-appellant submits that the learned Commissioner (Appeals) has wrongly entertained appeal filed by the respondent for the reason that against a communication of the Superintendent, Central Excise & Customs, Range-1, Division-II, Aknkleshwar, the respondent’s appeal does not lie before Commissioner (Appeals).The letter written by the Superintendent is not an order appealable, therefore the Commissioner (Appeals) passed the order on merit is not sustainable and the same deserve to be set-aside. He reiterates the grounds of appeal.
5. On the other hand Shri Anand Nainawati with Shri Amber Kumrawat, learned Counsels appearing on behalf of the respondent submits that the respondent initially not availed Cenvat credit in routine and they asked the department by giving intimation about their intention to avail Cenvat credit. However, the same was denied by letter dated 25.09.2012 by the Superintendent. He submits that denial for availing Cenvat credit is a decision affecting the rights of the respondent to avail substantial benefit. Therefore, the said order whereby the Superintendent has taken decision not to allow credit is clearly appealable. Hence, the order passed by learned Commissioner (Appeals) is legal and proper, does not require any interference. He placed reliance on the following judgments:-
(a) Gujarat Ambuja Cement Limited vs. CCE – 2006 (197) ELT 39
(b) Bhagwati Gases Limited vs. CCE – 2008 (226) ELT 468
(c) Racold Thermo Limited vs. CCE – 2012 (27) STR 398
(d) Usha International vs. CCE – 2017 (357) ELT 532
6. We have carefully considered the submissions made by both the sides and perused the record. We find that the only grievance of the Revenue in their appeal is that learned Commissioner (Appeals) should not have entertained the appeal against the letter written by Superintendent. In this regard we find that there is no dispute that appellant have sought allowance of credit in respect of input service attributed to dutiable goods which was very much in accordance with the Cenvat Credit Rules. The Superintendent vide letter dated 25.09.2012 denied the benefit claimed by the appellant assessee. It is also stated in the said letter that in case of availment of credit which was claimed by the appellant, penal action shall be taken against the respondent. The said letter therefore is clearly a decision given by a proper officer. The appeal provisions before the Commissioner (Appeals) is provided under Section 35 which is reproduced below:-
SECTION 35. Appeals to [Commissioner (Appeals)].—
“(1) Any person aggrieved by any decision or order passed under this Act by a Central Excise Officer lower in rank than a 2[Commissioner of Central Excise] may appeal to the 3[Commissioner of Central Excise (Appeals)] [hereafter in this Chapter referred to as the 1[Commissioner (Appeals)]] 4[within sixty days] from the date of the communication to him of such decision or order:
[Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days.]
[(1A) The Commissioner (Appeals) may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.]
(2) Every appeal under this section shall be in the prescribed form and shall be verified in the prescribed manner.´
From the plain reading of Section 35, it is clear that any decision or order passed by a proper officer below the rank of Commissioner is appealable before Commissioner (Appeals). Accordingly there is absolutely no ambiguity in Section 35. The letter whereby the Superintendent has clearly held that respondent is not eligible to take credit, the said letter is clearly a decision against which appeal lies before Commissioner (Appeals) as per the strict interpretation of Section 35. We also notice that if the department’s contention is accepted then the respondent left with no remedy against denial of substantial benefit claimed by the respondent and respondent is remediless. The decisions cited by the respondent clearly support their case.
7. In view of our above observation, we are of clear opinion that in the facts of the present case the letter written by Superintendent is a decision against which the appeal lies before Commissioner (Appeals) under Section 35 of the Act. Accordingly, the order of the Commissioner (Appeals) is absolutely legal and correct hence the same is upheld. The appeal is dismissed.
(Pronounced in the open court on 11.04.2023)
