TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 468
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....ment activity. It was also revealed that after developing any drugs, the technology was transferred to their own manufacturing unit. It was observed that the CEVAT credit availed was utilized for payment of Service Tax on Scientific and Technical Consultancy Services. It was alleged that the Respondent was not entitled to avail CENVAT credit as they were not involved in any manufacturing activity. * On these allegations, a show cause notice was issued proposing cancellation of Central Excise Registration and for recovery of wrongly availed CENVAT credit of Rs. 74,71,109/-. * After following due process, the Ld. Commissioner vide impugned order dropped the demand on merits as well as on limitation. * Hence, the present appeal. 3. Heard both the parties and perused the records. 4. Ld. DR appearing for the Revenue submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submits that the observation of the Ld. Commissioner is that if on verification the information provided by the Respondent at the time of making application for registration was found to be incorrect, then the Registr....
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....iven any reason or evidence to say that the present unit is not designed for manufacturing purposes but only for Research and Development of the product. He further submits that the Respondent has a large number of machines capable of manufacturing the pharmaceutical products for which the license has been granted to them. It was for the Revenue to adduce a technical report of an expert to prove that the machinery of the Respondent were not capable of carrying out required manufacturing process. Ld. Counsel submitted that the decision in the case of Dina Iron and Steel Industries V/s CCE 2003 (155) E.L.T. 110 has held that for determination of capacity of a machine, report from a technical person should be obtained. The Revenue has failed to substantiate their stand and hence, the demand is not sustainable. He further submits that respondent has placed on record a certificate from the Chartered Engineer to certify that the machinery installed in the premises of Respondent are capable of carrying out manufacturing activity and the said certificate was relied upon by the adjudicating authority while deciding the present matter. He further submits that the Revenue has only relied upon....
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.... that the Respondent does not have the facility of manufacturing of Pharmaceutical Products and is only doing research and development activity for which cenvat credit on input and capital goods is not permissible under Rule 3 of Cenvat Credit Rules, 2004; Revenue in order to deny the cenvat credit has only relied upon the statement of one Senior Scientist of the Respondent but the said statement of the respondent has not been brought on record and the copy of which has not been given to the respondent even on asking by the respondent. We also found that in the pharmaceutical industry before a drug is manufactured and supplied in the market, a lot of research has to be undergone and a number of tests are to be conducted before releasing in the market. In view of these facts, we find that the respondent is engaged in the manufacturing of drug also. 7. Besides this, the Ld. Commissioner has also come to the conclusion that even for conducting research and development, the respondent is registered under the service tax and is paying service tax and therefore the respondent is entitled to cenvat credit. 8. Further, we find that the revenue has failed to bring any evidence on record t....
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....ssion of facts or other situations should be with intent to evade the payment of tax. Thus, there has to be a physical action of suppression of facts coupled with intent to evade the payment of tax. The revenue has to adduce evidence that the Noticees had the knowledge that they had incorrectly availed the CENVAT credit and the incorrect availing was with intent to evade the payment of service tax. There has to be mala fide intention or guilty mind on part of the Noticees to invoke extended period of limitation. Accordingly, the physical act of suppression of facts and the mala fide intention should simultaneously be present to invoke the extended period of limitation. The legal position stated here is based on decisions of the hon'ble Supreme Court of India in relation to recovery of central excise duty when the extended period of limitation has been invoked for recovery of central excise duty on the ground of suppression of facts or other situations envisaged in proviso to Section 11A (1) of Act, 44. In the case of Tamil Nadu Housing Board v CCE, Madras, 1994 (74) ELT 9 (SC), in relation to Section 11A of Act, 1944, the normal period of limitation for recovery of central exci....
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.... construed liberally. When the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. That is,the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word 'evade' in the context means defeating the provision of law of paying duty. It is made more stringent by use of the word "intent'. In other words the assessee must deliberately avoid payment of duty which is payable in accordance with law. In Padmini Products v. Collector of Central Excise 1989 (43) EL.T. 195, it was held that where there was scope for doubt whether case for duty was made out or not, the proviso to Section 11A of the Act would not be attracted (emphasis supplied) In the present proceedings no evidence has been brought on record to prove that the situations visualised in proviso to Section 11A (1) of the Act, 44 or Section 73 (1) of the Act existed. There is nothing on record to show that the Noticees were aware that they were not entitled to take CENVAT credit and they intentionally took the credit and suppressed the information in order to evade the payment of service tax by utilizing the inc....