GELTEC LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, BANGALORE

JUDGEMENT

(1.) THIS appeal is directed against Order -in -Original Nos. 35 & 36/2007, dated 28 -9 -2007.

(2.) THE relevant fact that arise for consideration are that while verifying the records of the appellant, it was found that during the course of manufacture of Gelatin Capsules using Gelatin I.P., Gelatin B.P (Spl. For export), Geltain Tablet grade, Gelatin Mass Waste is generated. Further it was noticed that the appellant had destroyed such Gelatin Mass Waste without reversing the credit availed on the input contained therein during the period August, 2001 to March, 2006. It appeared that in terms of provisions of sub -rule 4(b) of Rule 3 of Cenvat Credit Rules, 2004 or under the analogous provisions namely sub -rule (4) of Rule 3 of Cenvat Credit Rules, 2002 or sub -rule (1B) of Rule 57AB of the Central Excise Rules, 1944, as it existed during the material time, either the appellant is required to reverse the credit taken on inputs not used in or in relation to the manufacture of dutiable goods or no credit should have been taken on such supply of inputs, which are used for the manufacture of the exempted goods. Further, the appellant had filed the application for remission of duty vide their Letter No. BP/CEX/145/03 -04 dated 27 -2 -2003 under Rule 21 of Central Excise Rules, 1944, but it appeared that they did not reverse the credit as contemplated in the Boards Circular No. 800/33/2004 CX., dated 1 -10 -2004. The appellant during the period August, 2001 to March, 2006 has removed 863488 kgs. of Gelatin Mass Waste valued at Rs. 14,84,79,560/ - without reversing the Cenvat credit availed on said portion of the inputs, which works out to Rs. 2,38,32,217/ - (Rs. 2,37,56,730/ - being the BED and Rs. 75,487/ - the Education Cess). It was concluded that appellants have violated the provisions of Rule 3 of Cenvat Credit Rules, 2004/2002 and Rule 57AB of Central Excise Rules, 1944.

(3.) THE learned Counsel appearing on behalf of the appellant would submit that the issue of reversal of Cenvat credit attributable to the quantity of inputs gone into the finished goods, on which remission was sought, is settled in favour of assessee by the Larger Bench in the case of Grasim Industries Ltd. v. CCE, Indore as reported at 2007 (208) E.L.T. 336 (Tri. -LB). It is his submission that as held by the Larger Bench, there is no provision for reversal of Cenvat credit on the goods for which remission was granted. It is also the submission that by accepting the decision of the Larger Bench, the Central Government of India has amended the provisions of Central Excise Rules to incorporate this in the Rules itself, which has come into effect from 2007. It was also submitted by him that Gelatin Mass Waste manufactured by the appellant is not excisable. He would also submit that the Gelatin Mass Waste generated in the manufacturing process is not a final product and hence, reversal of Cenvat credit as sought by the department is totally unwarranted and that the provisions of Cenvat Credit Rules are not applicable in this case. It is also the submission that the present case is covered by the erstwhile Rule 57D of Central Excise Rules, 1944 and the clarification issued by the Board vide Circular F. No. B -4/7/2000 -TRU, 3 -4 -2000. He would rely upon the decision of the Tribunal in the case of CCE, Pune -II v. GES Polymers Pvt Ltd. as reported in 2008 (225) E.L.T. 122 (Tri. -Mumbai).