Commissioner Of Central Excise (Ltu), ... vs M/S Glenmark Pharmaceuticals Ltd

(Arising out of Order-in-Original No. 200/COMMR./WLH/LTU-M/CX/2014 dated 14.10.2014 passed by the Commissioner of Central Excise, LTU, Mumbai).

For approval and signature:

Honble Shri S.S. Garg, Member (Judicial) Honble Shri Raju, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy : Seen of the order?

4. Whether order is to be circulated to the Departmental : Yes authorities? ======================================================

Commissioner of Central Excise (LTU), Mumbai Appellant

Vs.

M/s Glenmark Pharmaceuticals Ltd. Respondent

Appearance: Shri Hitesh Shah, Commissioner (AR) for Appellant

Shri V.M. Doiphode, Advocate for Respondent

CORAM: SHRI S.S. GARG, MEMBER (JUDICIAL) SHRI RAJU, MEMBER (TECHNICAL)

Date of Hearing: 08.03.2016

Date of Decision: 10.03.2016

ORDER NO.

Per: Raju

M/s Glenmark Pharmaceuticals Ltd. (GPL in short) are engaged in manufacture of pharmaceuticals products. A show-cause notice was issued to GPL, inter alia, proposing to recover CENVAT Credit amounting to Rs.1,25,50,399/- for the period 2011-12 along with interest under Rule 6 of the Cenvat Credit Rules, 2004 invoking Section 73 of the Finance Act, 1994. M/s GPL during the personal hearing accepted their liability of reversal as well as interest as they had already paid the same. M/s GPL in its reply to the show-cause notice had contested that they had not committed any fraud or mis-declaration and stated that it was inadvertent error. They had also argued that no interest is payable as they have not utilized the said credit. They had also argued that they are not liable to penalty as there was no fraud or willful mis-statement or suppression of facts on their part. The Commissioner in his order, inter alia, limited his decision to the determination of liability of interest and penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act. After examining the various decisions of the Tribunal, the Commissioner held that no interest is payable on such erroneously availed CENVAT Credit as the same was not utilized. Further, after observing that in absence of any specific allegation regarding intention on part of noticee to evade the duty, no penalty can be imposed under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Central Excise Act, 1944.

2. Aggrieved by this order, the Revenue reviewed this order and filed an appeal on the following grounds: -

(i) The first ground raised was that the adjudicating authority has not countered/negated the points put forth in the show-cause notice and had failed to appropriate the CENVAT Credit reversal of Rs.1,25,50,399/-.

(ii) The second ground raised was that the Commissioner failed to notice the decision of Hon'ble Supreme Court in the case of Ind-Swift Laboratories Ltd. and CBE&C Circular No. 897/17/2009-Cx dated 3.9.2009.

(iii) It was also argued that since the reversal of credit pertain to the financial year 2011-12, the provisions of interest under Rule 14 of the Cenvat Credit Rules, 2004 as they existed prior to 17.3.2012 would be applicable.

On the aforesaid grounds, Revenue sought to set aside the order of the Commissioner and remand for the same for reconsidering.

3. The matter was argued by both the parties at length. However, there was no dispute on the issue that there are no findings in the Order-in-Original regarding confirmation of appropriation of the amount of CENVAT reversal. To that extent, the impugned order is not a speaking order. The Revenue has cited the decision of the Hon'ble Supreme Court in the case of Ind Swift Laboratories Ltd. in their grounds of appeal.

4. The learned Counsel for the GPL argued that there are a number of High Courts decision which have discussed the said decision of Hon'ble Supreme Court. Since in respect of the main issue regarding confirmation of the reversal of the credit itself, the Order-in-Original is not a speaking order, the issue regarding interest raised in the Revenues appeal cannot be decided.

5. In view of the above facts of this case, the impugned order is set aside so far as it relates to issue of recovery of regular credit and consequential issue raised in the ground of appeal. The impugned order is set aside to that extent and remanded for fresh adjudication on the limited issue raised in the grounds of appeal by the Revenue. The Cross-objection is also disposed of.

(Pronounced in Court on 10.03.2016)

(S.S. Garg) (Raju) Member (Judicial) Member (Technical)

Sinha

1 Appeal No. E/85239/15