Case Law Details
West Coast Pharmaceutical Works Ltd Vs C.C.E. (CESTAT Ahmedabad)
The case of West Coast Pharmaceutical Works Ltd Vs C.C.E.-Ahmedabad, before the CESTAT Ahmedabad, concerns the confirmation of an amount equivalent to 5%/10% of the value of exempted goods by the Adjudicating Authority, despite the appellant having already reversed proportionate Cenvat Credit.
The appellant contended that in their own case for a different period, the tribunal had remanded the matter on the same issue. Further, the appellant cited various judgments in support of the argument that when the proportionate credit was reversed, the demand under Rule 6(3) of the Cenvat Credit Rules could not sustain.
The Revenue, while reiterating the findings of the original order, did not object to the matter being remanded.
Upon examination, the Tribunal found a precedent in an earlier case involving the same appellant and identical issue, only for a different period. The Tribunal had remanded the earlier case back to the Adjudicating Authority. Given the similarities, the Tribunal decided to remand this case too, setting aside the original order.
The Tribunal’s decision emphasized that the Cenvat Credit Rules’ objective is to prevent the assessees from availing Cenvat Credit on inputs or input services used in the manufacture of exempted goods or services, rather than extracting an undue amount from them.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the Adjudicating Authority was right in confirming an amount equivalent to 5%/ 10% of the value of exempted goods when the appellant had already reversed proportionate Cenvat Credit.
2. Shri, Amal Dave Learned Counsel appearing on behalf of the appellant at the outset submits that in the appellant’s own case only for the different period on the same issue remanded the matter vide final order no A13152/131153-2017 dated 06-10-2017. He request that this matter may also be remanded for deciding the matter as per the observation made by this tribunal in their own case cited (Supra).
2.1 He further submits that this issue was otherwise considered in various judgments and the tribunal has taken a view that when the proportionate credit was reversed the demand of 5%, 10% under Rule 6(3) of Cenvat Credit Rules shall not sustain. He placed reliance on the following judgment:
- Bombay Minerals Ltd. V/s. CCE, Rajkot, 2019(29) GSTL 361 (Tri.-Ahmd.)
- Welspun Corp. Ltd. V/s. CCE, Kutch 2019(368) ELT 179 (Tri.-Ahmd.)
- CESTAT Ahmedabad Final order No. A/12299/2021 dated 02/04.08.21 in case of M/s. P&B Pharmaceuticals Limited.
- CCE, Ahd-ll V/s. Maize Products. 2009(234) ELT 431 (Guj.)
- CCE V/s. Maan Pharmaceuticals Ltd. 2011(263) ELT 661 (Guj.)
3. Shri, Tara Prakash, Learned Deputy Commissioner (AR) appearing on behalf of the revenue reiterates the findings of the impugned order he also expressed no objection if the matter is remanded.
4. On careful consideration of the submission made by both the sides and perusal of record. We find that on the identical issue in the same set of facts only for the different period, this tribunal vide final order No. A13152/13153-2017 dated 06-10-2017 remanded the matter to the adjudicating authority. The finding of the said order is reproduced below:
“5. I have carefully considered the submissions advanced by bot the sides and perused the records. I find that more or less on similar facts and circumstances, this Tribunal analyzing that provisions of Rule 6(3) of CENVAT Credit Rules, 2004 in the Mercedes Benz’s case(supra), observed as follows:
“5.4 We find that the appellant admittedly pald an amount of Rs. 4,06,785/- plus interest, this is not under dispute. Therefore In our view, the appellant have complied with the condition prescribed under Rule 6(3)(II) read with sub-rule (3A) of Rule 6 of Cenvat Credit Rules, therefore demand of huge amount of Rs. 24,71,93,529/- of the total value of the vehicle amounting to. Rs. 494,38,70,577/- sold In the market cannot be demanded. We are also of the view that Rule 6 of the Cenvat Credit Rules Is not enacted to extract Illegal amount from the assessee. The main objective of the Rule 6 Is to ensure that the assessee should not avail the Cenvat Credit in respect of Input or input services which are used in or In relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credit attributed to the input or input services used In the exempted goods. It is also observed that in either of the three options given in sub-rule (3) of Rule 6, there is no provisions that If the assessee does not opt any of the option at a particular time, then option of payment of 5% will automatically be applied. Therefore we do not understand that when the appellant have categorically by way of their Intimation opted for option provided under sub-rule (3)(1), how Revenue can Insist that option (3)(i) under Rule 6 should be followed by the assessee”
4.1 We also find that this issue is no longer res-Integra decided in various Judgments cited (supra). However, since in the appellant’s own matter this tribunal has given specific observation and remanded the matter, this matter also deserves remand. Accordingly we set aside the impugned order and remand the matter to the adjudicating authority for passing a fresh de novo adjudication order considering the observation made by this tribunal in the order dated 06-10-2017 (supra).
5. Appeal is allowed by way of remand to the Adjudicating Authority.
(Pronounced in the open court on 03.07.2023)
