TaxTMI 
TaxTMI 
2025 (11) TMI 972
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tax Appellant Tribunal, West Zonal Bench, Ahmedabad (for short "the CESTAT") has recorded the interim order passed by this Court in the case of Messrs Dishman Pharmaceuticals and Chemicals Pvt. Ltd. (supra) and now, the final decision has been passed by this Court in the said case. 3. The facts, which are not in dispute, are incorporated as under: "3A. M/s. Sun Pharmaceuticals Industries Limited, (herein after referred to as "the respondent") was a 100% EOU unit engaged in the manufacture of pharmaceutical products falling under chapter 30 of the first schedule to the central excuse Tariff Act, 1985. And importing the goods duty free in terms of Notification No. 52/2003-cus dated 31.03.2003. B. During the year 2012-13 they exited from the 100% EOU Scheme. Accordingly, they applied for de-bonding (letter dated 29.08.2012 enclosed) and self-assessed the duty liability with a significant amount paid through cash and the remaining through CENVAT Credit. The department issue 'No Objection Certificate' on 30.10.2012 regarding their De-bonding from 100% EOU, in view of legal undertaking dated 26. 10. 2012 submitted to accept any future liability/refund due to any leg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cause notice and ordered the recovery of customs duty of Rs. 8,30,90,677/- along with applicable interest and equal penalty and also imposed penalty of Rs. 25,000/- on Shri Manoj Kanojia, Assistant Manager-cum-authorized signatory of the respondent. Being aggrieved, the respondent-Industry filed an appeal before the CESTAT, Ahmedabad and the issue to be decided by the Tribunal is "whether the amount of the counter-veiling duty which is payable at the time de-bonding 100% EOU can be paid from the accumulated Cenvat credit by an EOU Unit." 5. Thus, in the present appeal, the substantial question of law, i. e "whether the amount of the counter-veiling duty which is payable at the time de-bonding 100% EOU can be paid from the accumulated Cenvat credit by an EOU Unit.", is akin to the one, which is already answered by this Court in the judgement dated 18.12.2024 in the case of Messrs Dishman Pharmaceuticals and Chemicals Pvt. Ltd. (supra). The relevant observations are as under: "6. The short issue which therefore, arises for determination of this Court is whether the petitioners can be permitted to pay an amount equal to the excise duty leviable on the goods lying with the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Development Commissioner, KASEZ had in principle allowed the petitioners' application for partial debonding but certificate of confirmation regarding discharging duties foregone on the goods lying unutilized in the petitioners' plant that was proposed, had to be taken from the respondent No. 2. The petitioners had proposed that the customs duty foregone on the imported materials shall be paid in cash whereas, the excise duty foregone on the goods lying in the plant shall be paid from legally availed Cenvat credit lying with the petitioners. The petitioners had further reasoned that the difference in the modes of payment was on account of the fact that the customs duties were required to be discharged by any importer (s) by paying dues as prescribed whereas, the excise duties could be paid by the manufacturer (s) of the goods from the accrued Cenvat credit of the said manufacturer (s). 9.2 The dispute arose in respect of the portion of the excise duty payable by the petitioners when, the respondent No. 2, by communication dated 03. 08. 2015 (impugned) called upon the petitioners to pay the excise duty only in cash and not from the Cenvat credit, relying upon Rule 3 (4) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re of tractors and commercial vehicles varied from 15% to 25%, whereas the final products attracted excise duty of 10% or 15% only. The value addition was also not of such a magnitude that the excise duty required to be paid on final products could have exceeded the total input credit allowed. Since the excess credit could not have been utilised for payment of the excise duty on any other product, the unutilised credit was getting accumulated. The stand of the assessees is that they have utilised the facility of paying excise duty on the inputs and carried the credit towards excise duty payable on the finished products. For the purpose of utilisation of the credit, all vestitive (sic) facts or necessary incidents thereto have taken place prior to 16-3-1995 or utilisation of the finished products prior 16-3-1995. Thus the assessees became entitled to take the credit of the input instantaneously once the input is received in the factory on the basis of the existing Scheme. Now by application of Rule 57-F(4-A), the credit attributable to inputs already used in the manufacture of the final products and the final products which have already been cleared from the factory alone is sought ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods 10.2 In the case of Collector Vs. Dai Ichi Karkaria Ltd. [1999 (112) ELT 353 (SC)], the Hon'ble Apex Court has recorded categorical findings as under: - "Rule 57G provides that the manufacturer intending to take credit of duty paid on inputs must file a declaration with the concerned excise officer indicating what the final products are that are manufactured in its factory and the inputs intended to be used therein and obtain an acknowledgement thereof. The manufacturer, having filed the declaration and obtained the acknowledgement, can take credit for the duty on the inputs received by him. Rule 57I provides for the recovery of credit wrongly availed of or utilised in an irregular manner. The manufacturer is then required to show cause why he should not be disallowed such credit, or, if it has utilised it, why its value should not be recovered from him. After considering the reply, the concerned excise officer is empowered to make the appropriate order in such terms. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uaranteed under Article 19 (1) (g) of the Constitution. On both the counts, therefore, that portion of sub-rule (3A) of rule must fail. 35. The situation can be looked at slightly different angle. With or without the provisions of sub-rule (3A), liability to pay interest for the default period as per sub-rule (3) of rule 8 continues. Sub-rule (3A) is basically a mechanism for stringent recovery and does not create a new liability unless this mechanism itself is breached. In such a mechanism to provide for withdrawal of CENVAT credit facility for paying the duty borders to creating a penalty. Insisting on an assessee in default to clear all consignments on payment of duty would be a perfectly legitimate measure. However, to insist that he must pay such duty without utilising CENVAT credit which is nothing but the duty on various inputs already paid by him would be a restriction so harsh and out of proportion to the aim sought to be achieved, the same must be held to be wholly arbitrary and unreasonable. We may recall, the delegated legislature in its wisdom now dismantled this entire mechanism and instead has provided for penalty at the rate of 1% per month on delayed payme....