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2015 (12) TMI 1643 - CGOVT - Central ExciseRebate - Rule 18 of CER 2002 - The Commissioner (Appeals) vide impugned Order-in-Appeal No. 03-10/Kol-III/2013 dated 15-2-2013 held that as the goods were exempted any amount which is not payable in terms of Section 3 read with Section 4 ibid does not have the character of duty and were not eligible for rebate under Rule 18 ibid. He ordered the same to be repaid in cash along with interest under Section 11AB ibid. Held that - when the goods are absolutely exempted from payment of duty the assessee cannot pay duty as per Section 5A(1A) proviso wherein it has been provided that where an exemption under sub-section (1) in respect of any excisable goods from the whole of duty of excise leviable thereon has been granted absolutely the manufacturer of such excisable goods shall not pay the duty of excise on such goods - The amount so paid cannot be treated as duty under Section 3 of the Act and therefore not admissible as rebate under Rule 18 of Central Excise Rules 2002 read with Notification No. 19/2004-C.E. (N.T.) dated 6-1-2004 as Rule 18 authorizes refund of duty only. Government also observes that C.B.E. & C. Circular No. 423/56/98-CX dated 22-9-1998 relied upon by the applicant was issued in 1998 and subsequently the Hon ble High Court of Bombay had delivered above said judgment referred in Para 15.1 which was also upheld by the Apex Hon ble Supreme Court - Application rejected.
Issues Involved:
1. Whether the impugned goods attract duty or are entitled to rebate. 2. Whether rebate erroneously sanctioned can be recovered along with interest. 3. Whether a show cause notice is required before filing an appeal under Section 35E. Detailed Analysis: Issue 1: Duty on Impugned Goods and Entitlement to Rebate - The central issue is whether the impugned goods (Paclitaxel, Gemcitabine Hydrochloride, and Irinotecan Hydrochloride Trihydrate) are chargeable to 'nil' rate of duty under Notification No. 4/2006-C.E., dated 1-3-2006. - The Notification exempts drugs/bulk drugs listed in List 3 or List 4 unconditionally. The definition of "bulk drugs" includes any pharmaceutical product used as an ingredient in any formulation. - It is undisputed that the impugned goods are specified in List 3 and List 4, thus they are unconditionally exempt from duty. - The Government observed that the goods are absolutely exempt from duty under Section 5A(1A) of the Act, which means the manufacturer cannot pay duty on such goods. Therefore, any amount paid cannot be treated as duty and is not eligible for rebate under Rule 18 of the Central Excise Rules, 2002. Issue 2: Recovery of Erroneously Sanctioned Rebate - The Commissioner (Appeals) held that since the goods were exempt, any amount paid does not have the character of duty and thus, the rebate sanctioned was irregular. - The Government supported this view, noting that the rebate was not admissible as the goods were exempt from duty. - The order for recovery of the rebate amount along with interest under Section 11AB was deemed legal and proper. Issue 3: Requirement of Show Cause Notice Before Appeal Under Section 35E - The applicant contended that no show cause notice was issued before filing the appeal. However, the Commissioner (Appeals) relied on the Supreme Court judgment in the case of M/s. Asian Paints, which stated that recovery can be made pursuant to an appeal filed under Section 35E or by raising demand under Section 11A. - The Tribunal has held that Section 11A and Section 35E operate in different fields and for different purposes, thus a fresh demand is not required to be raised when an appeal is filed under Section 35E. - The Government found that the proceedings of admissibility of rebate were already initiated by the Order-in-Original and carried forward under Section 35E. - The C.B.E. & C. Circular No. 423/56/98-CX, dated 22-9-1998, was found to be overridden by subsequent judicial decisions, confirming no pre-condition of issuing a show cause notice before reviewing the order under Section 35E. Conclusion: - The Government upheld the Order-in-Appeal, rejecting the revision application, and confirmed that the rebate sanctioned was erroneous and must be repaid with interest. The appeal process under Section 35E was deemed valid without the necessity of a prior show cause notice.
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