Case Law Details
Geltec Private Limited Vs Commissioner of Central Excise (CESTAT Bangalore)
Introduction: In a recent case, Geltec Private Limited challenged the demand for the reversal of CENVAT credit related to “Gelatin Mass Waste” generated during their manufacturing process. The Central Excise and Service Tax Appellate Tribunal (CESTAT) in Bangalore deliberated on whether this waste product could be considered excisable goods, leading to the demand for CENVAT credit reversal. This article provides a detailed analysis of the case and its implications.
Detailed Analysis:
1. Background of the Case: Geltec Private Limited, a manufacturer of pharmaceutical products, produces “soft gel capsules” categorized under Chapters 29 and 30 of the Central Excise Tariff Act, 1985. During their manufacturing process, they generate a waste product known as “Gelatin Mass Waste.” In compliance with the provisions of the Drugs and Cosmetics Act, this bio-hazardous waste is destroyed on-site. The case revolves around whether this waste product can be classified as excisable goods, which, in turn, prompts a demand for the reversal of CENVAT credit.
2. Demand for CENVAT Credit Reversal: The issue arose when Geltec Private Limited applied for remission of duty for the waste product, considering it as excisable goods under Rule 21 of the Central Excise Rules, 2002 for the years 2004-2007. However, during a specific period from September 2007 to March 2008, they destroyed the Gelatin Mass Waste within their factory premises without seeking permission from the department, as required by the proviso to Rule 21. Consequently, show-cause notices were issued, proposing the reversal of CENVAT credit amounting to Rs. 45,74,204, along with interest and penalties.
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