Tribunal sets aside order, emphasizes reconciliation for revenue neutrality, remands within two months.

Commissioner of Central Excise & ST, Bhavnagar Versus Gujarat Heavy Chemicals Limited

Commissioner of Central Excise & ST, Bhavnagar Versus Gujarat Heavy Chemicals Limited - TMI Issues involved:
The appeal against the impugned order-in-original passed by the Commissioner of CGST & Central Excise Bhavnagar, involving excise duty demand, penalty, and interest on the respondents.

Details of the judgment:

Issue 1: Excisability of repacking activity
The respondents were engaged in importing Sodium Trio Poly Phosphate (STTP) in bulk and repacking it into retail packs, which was considered as manufacturing activity under Chapter Note 9 to Chapter 28. The respondents had obtained Central Excise Registration and were paying excise duty on the retail packs cleared for home consumption. The Directorate General of Central Excise Intelligence (DGCEI) issued a show cause notice proposing duty demand based on various counts of repacking and clearance without payment of excise duty.

Issue 2: Revenue neutrality and Cenvat credit
The appellant argued that all goods were imported duty paid, including CVD/SAD, and any duty liability on repacked goods or alleged clandestine removal could be adjusted from Cenvat credit. The reconciliation exercise to determine the duty payable and Cenvat credit adjustment was not conducted. The Tribunal found that if the Cenvat credit was sufficient to adjust against the demand of output, the case would be revenue-neutral, and no further demand could be raised. The matter was remanded to the Adjudicating Authority for a fresh order after the reconciliation exercise.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter for a fresh order within two months, emphasizing the need for reconciliation to determine revenue neutrality. The appeals were disposed of by way of remand, with the cross objection also being disposed of.

*(Pronounced in the open court on 03.05.2023)*