2017 (11) TMI 16 - AT - Central Excise

CENVAT credit - proportionate credit on exempt goods - Bulk Drugs & P.P. Medicines - classified under CTH 2939 2090 or under CTH 2942 0090? - Held that - an identical issue has come up before this Tribunal in the assessee-Respondents own case for the earlier period IPCA Laboratories Ltd. Vs CCE, Indore 2015 (10) TMI 2325 - CESTAT NEW DELHI , where it was held that In view of the retrospective amendment introduced by Finance Act, 2010, the appellant were entitled to reverse the proportionate cenvat credit attributable to the quantum of input services used in or in relation to manufacture of exempted final product and by foregoing this credit, they have complied with this obligation - credit allowed. CENVAT credit - denial on the ground that Hydroxy Chloroquine Sulphate (HCQS) medicine is not dutiable - Held that - when the duty has been accepted on the final product by the Department, then the assessee-Respondents are entitled for the Cenvat Credit which was rightly allowed by the adjudicating authority - credit allowed. Appeal dismissed - decided against revenue.

Summary

Issues Involved: Classification of goods under different headings, eligibility for Cenvat Credit on common input services, denial of Cenvat Credit for a specific product.

Classification of Goods:
The Department filed an appeal against the Order-in-Original passed by the Commissioner of Central Excise, Indore, classifying goods under Chapter Heading 2939 2090. The assessee-Respondents claimed classification under 2942 0090. The Tribunal referred to a previous case involving the same assessee where the issue of common input services for dutiable and exempted final products was discussed. The Tribunal noted that retrospective amendments allowed manufacturers to reverse proportionate Cenvat credit for exempted products even without separate accounts. Following the precedent, the Tribunal sustained the impugned order classifying the goods under 2942 0090.

Eligibility for Cenvat Credit on Common Input Services:
The Department contested the denial of Cenvat Credit amounting to ?2,22,664 for Hydroxy Chloroquine Sulphate (HCQS) on the grounds that it was not dutiable. The assessee-Respondents were paying duty on HCQS under the Central Excise Act, 1944. The Tribunal held that since duty was accepted on the final product by the Department, the assessee-Respondents were entitled to the Cenvat Credit. Consequently, the Tribunal sustained the impugned order allowing the Cenvat Credit for HCQS.

Conclusion:
The Tribunal dismissed the appeal filed by the Department, upholding the Order-in-Original. The decision was based on the classification of goods under the claimed heading by the assessee-Respondents and the eligibility for Cenvat Credit on common input services, including the specific case of HCQS. The Tribunal's decision was supported by the interpretation of relevant rules and previous judgments, ensuring compliance with legal provisions and principles.