PURE PHARMA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) HEARD the ld. Advocate for the appellant and ld. DR for the Respondent. Appellants challenges the Order dated 9th of March, 2009 passed by the Commissioner, Indore whereby the demand for an amount of Rs. 1,69,24,709/ -, has been confirmed in terms of explanation (ii) to the Rule 6 of the Cenvat Credit Rules, 2004 read with Rule 14 of the said Rules and Section 11A of the Central Excise Act, 1944 along with interest thereon in terms of Section 11AB of the said Act and penalty of equal amount besides the penalty of Rs. 2,000/ - in terms of Rule 15(3) of the Cenvat Credit Rules, 2004 has been imposed.

(2.) THE ld. Advocate for the appellants assailing the impugned order on three counts. Firstly, that during the relevant period that is from Jan., 2005 to March, 2008 the credit what was availed in relation to the service rendered was reversed and, therefore, there was no justification for confirming the amount at the rate of 8% of the value of the goods demanded under the impugned order. Secondly, it is the contention on behalf of the appellant that the demand relates the period from Jan., 2005 to March, 2008 in relation to which the show cause notice was issued on 7th August, 2008. Being so, the demand in relation to the period prior to one year of the date of issuance of show cause notice was time barred and there was no case for invoking the extended period of limitation in view of the disclosure of all the necessary facts under letters dated 22nd September, 2004 and 21st December, 2005 to the respondent. Thirdly, it is the contention on behalf of the appellant that considering the fact that the total credit, which is sought to be denied to the appellant is to the extent of Rs. 2,28,457/ - and Rs. 85,907/ -, the authorities below clearly erred in confirming the demand of huge amount of more than Rs. 1.00 Crore. Reliance is sought to be placed in the decision in the matter of Hello Minerals Water (P) Ltd. v. Union of India : 2004 (174) E.L.T. 422 (All.).

(3.) ON perusal of the impugned order and on consideration of the arguments canvassed by both the sides, prima facie, it is apparent that the fact that the appellants had been availing credit in relation to the services utilised in respect of exempted as well as non -exempted product was never in dispute. It is also not in dispute that they had not been maintaining separate account in relation to such services used in both the categories of the products. Only claim that was made was that they had reversed the credit availed in relation to the services utilised for exempted products on 30th November, 2008 in relation to the relevant period. The relevant period was from Jan., 2005 to March, 2008. Apart from the provisions of law, the judicial pronouncements clearly lay down that reversal of the credit has to be before the utilization of the credit. This has been clearly laid down in various orders passed by this Tribunal after taking note of the decision in the matter of Hello Minerals Water (P) Ltd. (supra) as well as the Supreme Court judgment in the matter of Chandrapur Magnet Wires (P) Ltd. v. Collector of Central Excise, Nagpur reported in : 1996 (81) E.L.T. (3) (S.C.). Being so, merely because the reversal has been done after its utilization, prima facie such a defence may not be of any avail to the assessee to avoid the liability which assessee may have to face in the form of the demand of amount equivalent to 8% of the valuation of the products in relation to which the credit has been availed for service utilized. As regards the invocation of the period of limitation, as rightly pointed out by the ld. DR, impugned order merely discloses proper consideration of this aspect, apart from the fact that the letters dated 22nd of September, 2004 & 21st December, 2005 nowhere refers to the fact about non -maintenance of separate account in relation to the credit availed for services utilized for the exempted and non -exempted products. It also does not disclose to what extent the credit was utilized in relation to each of the services specified in the letter dated 21st December, 2005. Being so, prima facie, it is difficult to find any fault with the findings arrived at by the Commissioner in the impugned order in this regard.