CIPLA LTD., Vs. COMMISSIONER OF CUSTOMS CENTRAL EXCISE

JUDGEMENT

(1.) M /s Cipla Ltd. and M/s Meditab Specialities Pvt. Ltd. (hereinafter referred to as the Assessees) are the Appellants in most of these appeals which are against denial of CENVAT credit of the excess amounts of duty paid on their inputs by the manufacturers/suppliers of the inputs. For instance, in Appeal No. E/1407/2007 filed by one of the Assessees, the challenge is against denial of CENVAT credit amounting to Rs. 1,52,84,200/ - on inputs manufactured and supplied by their sister units. The sister units at Bangalore and Kurkumbh manufactured bulk drugs and stock -transferred the same, on payment of Central Excise duty, to the Assessee's factory at Patalganga where CENVAT credit of the said duty was availed by the Assessee and utilized for payment of duty on the medicinal formulations (final product) manufactured out of the bulk drugs (inputs). The payment of duty on the bulk drugs by the units at Bangalore and Kurkumbh was based on provisional assessment. When the provisional assessments were finalized, the assessing authority found that excess amounts of duty had been paid than what was leviable by those units at the time of clearance of the goods. If the amount of duty provisionally assessed and paid at the time of clearance of the bulk drugs was adjusted against the amount of duty found, upon finalization of the provisional assessment, to be payable, the excess amount of duty arising out of such adjustment could be claimed as refund by the manufacturer. The bulk drug manufacturers, however, did not claim any such refund. The case of the Revenue as made out in the show -cause notice issued to the Patalganga unit of M/s Cipla Ltd is that the Patalganga unit was not entitled to avail CENVAT credit of any amount of duty in excess of what was liable to be paid on the inputs (bulk drugs) by the other two units (input -manufacturers) as per the finalized assessments. Hence CENVAT credit of the differential amount of duty (i.e., difference between the duty paid on the inputs on the basis of provisional assessments and the duty found payable as per the finalized assessments) was sought to be denied to the Assessee (Patalganga unit). In adjudication of the show -cause, the Commissioner of Central Excise disallowed the credit to the Assessee and ordered its recovery under Rule 12 of the CENVAT Credit Rules with interest under Section 11AB of the Central Excise Act. Penalty equal to duty was also imposed by the adjudicating authority. Similar orders were passed by the Commissioner against certain other units of M/s Cipla Ltd also on similar sets of facts. Hence the appeals of M/s Cipla Ltd.

(2.) APPEAL No. E/1412/07 was filed by a functionary of the company against the penalty imposed on him.

(3.) M /s MSPL had also availed CENVAT credit of Rs. 1,66,098.26 on their inputs (bulk drugs) which were received from M/s Cipla Ld (input manufacturer) during the period from 01 -02 to 03 -04. The credit was of the duty provisionally paid by M/s Cipla Ltd under Rule 7 of the Central Excise Rules. When their provisional assessments were finalized by the proper officer of Central Excise, it was found that the amount of duty paid by them was higher than what was leviable on the goods cleared to M/s MSPL. Subsequently, in a show -cause notice issued to M/s MSPL, the department sought to recover the differential amount of duty (difference between the amount of duty paid by the input manufacturer on the basis of provisional assessment and the amount of duty payable as per final assessment) which was allegedly taken in excess of the credit they were entitled to. Apart from demand of interest on duty under Rule 12 of the CENVAT Credit Rules, there was also a proposal to impose penalty under Rule 13 (2) of the CENVAT Credit Rules. These proposals were contested by the noticee. In adjudication of the dispute, the original authority confirmed the demand of duty of Rs. 1,66,098/ - with interest against M/s MSPL and imposed on them equal amount of penalty. Aggrieved, the party preferred an appeal to the Commissioner (Appeals), which was allowed by the appellate authority holding thus: