2022 (3) TMI 914 - AT - Central Excise

Tribunal denies exemption, limits penalty, orders reevaluation

M/s. Glenmark Generics Ltd. Versus Commissioner of CE & ST, LTU, Mumbai (Vice-Versa)

M/s. Glenmark Generics Ltd. Versus Commissioner of CE & ST, LTU, Mumbai (Vice-Versa) - TMI 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.