2022 (3) TMI 914 - AT - Central Excise

Manufacture of Bulk Drugs - eligibility for exemption under Sl No 47 (A) of the notification no 04/2006-CE dated 01.03.2006 - invocation of extended period of limitation - whether amount paid @ 5% or 8% or 10% of value of goods cleared claiming exemption from payment of duty should not have been adjusted against the demand made by denying the exemption claimed - levy of penalty u/s 11AC of the Central Excise Act 1962 - HELD THAT - In view of the findings recorded in the impugned order which are not disputed by the appellant/assessee there can be no denial of the fact that the goods cleared by the appellant/assessee are nothing but bulk drugs specifically exempted at Sl No 47 (B) of the Notification No 4/2006-CE subjected to following the procedure as specified by the condition No 2 appended to said notification. Admittedly procedure as per said condition no. 2 has not been followed by the appellant/assessee. When such procedure as specified by the notification has not been followed the benefit of the exemption at Sl No 47 (B) is not admissible to the appellant. We are not impressed by the arguments advanced by the appellant/assessee that they have correctly availed the exemption under Sl 47 (A) by referring to definition as per Drug Price Control Order defining drug includes bulk drug and its formulation. If this interpretation is agreed to entry at Sl No 47 (B) will become redundant and it is settled position in law any interpretation which renders some entry in the fiscal/ taxing statue cannot be correct interpretation. Generalis Specialibus non Derogant means erstwhile special law is given superiority over later general law - the specific entry in the notification will have to be given precedence over the general entry not defined but by referring to the definition of general entry from some other statue. Since the controversy in respect of interpretation of the exemption notification has now been settled by the Hon ble Apex Court in COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT relying on this decision there is no scope left for holding a view which is contrary to the principle laid down that notification needs to be construed strictly and ambiguities resolved in favour of the revenue. In view of the above there are no merits in the submissions made by the appellant/assessee on the merits of the case. Invocation of extended period of limitation - HELD THAT - There are no justification in the impugned order for invoking the extended period as Commissioner has not even recorded finding to effect that the ingredient with intent to evade the payment of duty for invoking the extended period of limitation is present in the case. The issue under consideration is purely of interpretation of two competing entries in the notification and the appellant/assessee has explained the reasons for the interpretation made by him for adopting a particular interpretation - Just because the interpretation of the notification adopted by the appellant/assessee is not acceptable it cannot be ground for invoking extended period of limitation. Appellant/Assessee have paid certain amounts while clearing the goods claiming exemption from duty @ 5% 8% or 10% of the value of goods as applicable - reversal of said amount required or not - HELD THAT - This amount which paid by the appellant/assessee was required to be paid by them in terms of Rule 6 of CENVAT Credit Rules 2004 as they were not maintaining separate account for the goods cleared under exemption and on payment of duty. The fact that appellant/assessee has paid the said amount cannot be disputed Commissioner has in his order only observed that the appellant/assessee was not able to provide any proof of such payment - the observation made by the Commissioner are totally erroneous as all the amounts so paid or reversed from the CENVAT account are definitely reflected in the monthly returns filed by the appellant/assessee. - for the periods when the claim to complete exemption from payment of duty is denied the amounts so paid need to be adjusted against the duty demanded denying the benefit of exemption claimed. Penalty imposed under Section 11AC - HELD THAT - Since the conditions for invocation of extended period as per Section 11 A do not exist in the present case the penalty imposed in terms of the Section 11 AC thus cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Applicability of exemption under Sl No 47(A) of Notification No 4/2006-CE.
2. Invocation of extended period of limitation for duty demand.
3. Adjustment of amounts paid at 5%, 8%, or 10% of the value of goods cleared.
4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Detailed Analysis:

1. Applicability of Exemption under Sl No 47(A) of Notification No 4/2006-CE:
The primary issue was whether the appellant/assessee correctly availed the exemption under Sl No 47(A) of Notification No 4/2006-CE for "Amiodarone Hydrochloride" cleared for home consumption. The appellant/assessee argued that "bulk drugs" should be included under the term "drugs" as per the Drug Price Control Order, 1995. However, the tribunal noted that "bulk drugs" are specifically covered under Sl No 47(B), which requires adherence to the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2002. The tribunal concluded that the exemption under Sl No 47(A) was not applicable since the appellant/assessee did not follow the prescribed procedure under Sl No 47(B).

2. Invocation of Extended Period of Limitation:
The Commissioner had invoked the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944, citing suppression of facts by the appellant/assessee. However, the tribunal found that the issue was purely interpretative, and the appellant/assessee had disclosed all relevant information. The tribunal held that the extended period of limitation was not justified, as there was no intent to evade duty.

3. Adjustment of Amounts Paid:
The appellant/assessee had paid amounts at 5%, 8%, or 10% of the value of goods cleared under exemption, as they did not maintain separate accounts for inputs used in exempted and dutiable products. The tribunal noted that these amounts were reflected in the monthly returns filed by the appellant/assessee and should be adjusted against the duty demand. The tribunal directed the original authority to allow these adjustments during the recomputation of the demand.

4. Imposition of Penalty under Section 11AC:
The tribunal referred to the Supreme Court's decision in the case of Rajasthan Spinning and Weaving Mills, which clarified that penalties under Section 11AC could only be imposed if the conditions for invoking the extended period of limitation were met. Since the tribunal held that the extended period was not applicable, it set aside the penalty imposed under Section 11AC.

Conclusion:
The tribunal summarized its findings as follows:
1. The demand is maintainable on merits.
2. The extended period of limitation cannot be invoked; the demand should be recomputed for the normal limitation period.
3. Adjustments should be allowed for amounts paid at 5%, 8%, or 10% of the value of goods cleared.
4. The penalty under Section 11AC is set aside.

The tribunal remanded the matter back to the original authority for recomputation of the demands and directed the Revenue authorities to finalize the issue within three months of the receipt of the order.