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of <h1>CESTAT rules in favor of Dr. Reddy's Labs, rejects recovery demand for rebate</h1> <h3>Commissioner of Customs, C. Ex., and Service Tax Versus Dr. Reddy’s Laboratories</h3> Commissioner of Customs, C. Ex., and Service Tax Versus Dr. Reddy’s Laboratories - 2016 (341) E.L.T. 580 (A. P.) Issues:Appeal under Section 35(G) of the Central Excise Act against the order of Customs, Excise and Service Tax Appellate Tribunal, Rebate claims filed by M/s. Dr. Reddy's Laboratories Ltd., Determination of rebate with reference to Central Excise Valuation Rules, Recovery of erroneously sanctioned rebate, Delhi High Court's judgment impact on the recovery order, Challenge to the order passed by CESTAT, South Zonal Bench, Bangalore.Analysis:The Commissioner of Customs appealed against the order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, regarding rebate claims by M/s. Dr. Reddy's Laboratories Ltd. The Tribunal allowed the appeal by Dr. Reddy's Laboratories, setting aside the Commissioner's order. Dr. Reddy's Laboratories had filed rebate claims for exports under the DEPB scheme and for P or P Medicaments. The Deputy Commissioner accepted the claims, leading to the issuance of rebate cheques. However, the Commissioner (Appeals) later allowed the department's appeals, resulting in show-cause notices for recovery of rebate amounts.Subsequently, the Adjudicating Commissioner confirmed the recovery orders, prompting Dr. Reddy's Laboratories to file revision applications. The Joint Secretary modified the orders partially, leading to a Writ Petition in the Delhi High Court. The High Court set aside the revision authority's orders, restoring the rebate amounts sanctioned earlier. The CESTAT, Bangalore, in light of the Delhi High Court's decision, set aside the recovery demand raised by the Commissioner.The appeal challenged the CESTAT's order on the determination of rebate with reference to Central Excise Valuation Rules. During the hearing, the appellant's counsel referred to the Delhi High Court's judgment, which was pivotal in setting aside the Department of Revenue's orders. The CESTAT, based on the Delhi High Court's decision, restored the original rebate order. The recovery order by the Commissioner was considered consequential and was set aside by the CESTAT.The CESTAT's decision was upheld as the Delhi High Court had set aside the recovery demands, rendering the recovery orders illegal. The CESTAT found no grounds for interference, and the appeal was dismissed. The recovery demand was deemed arbitrary and illegal, and any consequential recovery was seen as reviewing the Delhi High Court's order, which had attained finality.In conclusion, the CESTAT's decision was upheld, and the recovery demand for rebate was declared illegal in light of the Delhi High Court's judgment. The appeal was dismissed, with no costs imposed.
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