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2017 (8) TMI 1221 - AT - Central ExciseClandestine removal - medicines - it was alleged that the appellant has cleared the above mentioned medicines clandestinely during the period March, 2003 to July, 2004 without reversing the Cenvat Credit @ 8% as required under Rule 6 (3)(b) of the Cenvat Credit Rules, 2002 - Held that - on the exempted medicines namely Allopurinol & Mica clear during the March, 2003 to July, 2004, the appellant has already reversed the Cenvat Credit attributable to the inputs used in manufacturing of the said medicines along with interest, therefore, no demand is sustainable against the appellant on that ground. We further find that the remaining medicines which are exempted as per the Notification No. 5/99-CE and Notification No. 06/2002, the appellant has already paid the duty @ 8%/16%. The case of the Revenue is that the said duty is required to pay to the Department under Section 11D of the Act. In fact, it is fact on record that the amount which has recovered by the appellant from the buyers towards the duty has already been paid to the Department. This fact is not in dispute, therefore, under Section 11D of the Act, no demand is sustainable against the appellant. As regards the issue that the appellant is required to reverse the 8% of the value of the exempted goods, As it is fact on record that the appellant whatever duties they recovered from the buyers have been paid to the Department, therefore, no demand is sustainable under Section 11D of the Act. Accordingly, the said demand is also set aside. Penalty - Held that - the appellant was under bona-fide belief and availed the Cenvat Credit. As there is no mala-fide intention, therefore, no penalty is imposable on the appellants - penalty set aside. Appeal allowed - decided in favor of appellant.
Issues:
- Appellant's appeal against confirmed demands and enhanced penalty - Allegations of clandestine clearance of exempted medicines - Requirement to reverse Cenvat Credit under Rule 6(3)(b) of Cenvat Credit Rules, 2002 - Dispute over duty payment on exempted goods and reversal of Cenvat Credit - Appellant's contention on reversing Cenvat Credit and duty payment - Department's argument on reversal of 8% value of exempted goods - Analysis of demands under Section 11D of the Act - Penalty imposition based on bona-fide belief of appellant Detailed Analysis: The appellant appealed against confirmed demands and enhanced penalty imposed by impugned orders. The case involved allegations of clandestine clearance of exempted medicines without reversing Cenvat Credit as required under Rule 6(3)(b) of the Cenvat Credit Rules, 2002. The appellant, engaged in manufacturing pharmaceutical products, faced demands for duty payment on exempted goods and reversal of Cenvat Credit. The appellant's argument centered on having already reversed Cenvat Credit attributable to exempted goods and paid duty on certain medicines, thus challenging the demands under Section 11D of the Act. The Department contended that the appellant should reverse 8% of the value of exempted goods at the time of clearance, which the appellant allegedly failed to do. However, the Tribunal found that the appellant had already reversed Cenvat Credit and paid duty on exempted medicines, rendering the demands unsustainable under Section 11D. The Tribunal referenced the decision in Unison Metals Ltd. case and CBEC Circular to support its findings that if duty amounts collected from buyers were paid to the Department, no further reversal was required. Regarding penalties, the Tribunal noted that the appellant had bona-fide belief in availing Cenvat Credit during the relevant period, as per the precedent set by the Hon'ble Apex Court. Consequently, the Tribunal set aside the penalty imposed on the appellant. Ultimately, the impugned orders were overturned, and the appeals were allowed with any consequential relief. The Tribunal's decision was based on the appellant's compliance with duty payments and reversal of Cenvat Credit, supported by legal precedents and circulars, leading to the dismissal of demands and penalties.
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