2010 (3) TMI 1051 - AT - Central Excise

Summary

Issues:
Appeal against demand confirmation and penalty imposition for denial of credit on duty paid inputs containing alcohol used in final product manufacturing.

Analysis:
The Appellant challenged the order confirming a demand of Rs. 4,49,41,419.00 and imposing penalties on the firm and Managing Director. The dispute arose from the denial of credit on duty paid inputs, specifically Fruit Flavour syrup containing alcohol supplied by M/s. Quest International (India) Ltd. The Revenue contended that since the final product, Polybion Vitamin B Complex Syrup, also contained alcohol, it was not excisable, and thus, the Appellants were not entitled to credit for duty paid on such inputs. The Appellant argued that they received inputs along with a certificate of analysis from the supplier, showing no alcohol content, and used these inputs in manufacturing excisable goods on which appropriate excise duty was paid. They cited a Tribunal decision in a similar case in their favor. The Revenue maintained that the B-Complex Syrup containing alcohol falls outside central excise duty, leading to the incorrect availment of input duty credit. They referenced a Settlement Commission decision involving a similar situation where the mistake was admitted and credit reversed.

The Tribunal noted that the supplier, M/s. Quest International (India) Ltd., paid central excise duty on the Fruit Flavour Mix supplied to the Appellants for manufacturing their final product. The Appellants availed credit on duty paid inputs used in goods cleared with central excise duty payment. Referring to the Tribunal's decision in a related case involving M/s. Savera Pharmaceuticals Pvt. Ltd., where a similar demand was set aside, the Tribunal ruled in favor of the Appellants. The Tribunal distinguished the Settlement Commission's decision as based on party concessions, not setting a precedent. As the issue was already addressed in the M/s. Savera Pharmaceuticals case, the Tribunal set aside the impugned order and allowed the Appeal.

This judgment highlights the importance of proper documentation and adherence to excise duty regulations in claiming input credits. It emphasizes the significance of precedent set by Tribunal decisions and the limitations of decisions based on party concessions, ensuring consistency and fairness in tax disputes.