The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed appeals filed by Thermo Fisher Scientific India Pvt. Ltd. and upheld the demand of CENVAT credit along with interest and equal penalty for failure to reverse Special Additional Duty (SAD) credit while transferring imported inputs “as such” between its own manufacturing units. 

The Bench of Dr. Suvendu Kumar Pati (Judicial  Member) observed that the plea of revenue neutrality was not sustainable in the facts of the case. Referring to the Supreme Court ruling in Star Industries, the bench reiterated that merely because credit may be available elsewhere does not automatically establish revenue neutrality. The Tribunal also relied upon the Larger Bench ruling in Jay Yushin Ltd. to hold that revenue neutrality is a question of fact and must be specifically established in each case. 

The matter arose from two appeals challenging the Order-in-Appeal dated February 12, 2021 passed by the Commissioner (Appeals), Navi Mumbai. The dispute pertained to non-reversal of SAD component amounting to ₹4,77,073 and ₹1,13,366 under Rule 3(5) of the CENVAT Credit Rules, 2004. 

The Tribunal noted that the company had transferred imported inputs from its Navi Mumbai unit to another unit during the period between March 2016 and January 2017. While transferring the goods, the assessee reversed CENVAT credit relating to Countervailing Duty (CVD) and Education Cess, but failed to reverse the SAD component. The lapse was detected during a Special Audit conducted by the DG Audit team. 

Following the audit objection, the department issued show cause notices invoking the extended limitation period under Section 11A(4) of the Central Excise Act for recovery of duty along with interest and penalty. The adjudicating authority confirmed the demand, which was later upheld by the Commissioner (Appeals). 

Before the Tribunal, the assessee argued that the failure to reverse the SAD credit occurred due to lack of knowledge among staff members and was merely an inadvertent error. It was contended that there was no intention to evade duty because any reversal made at one unit would have been available as credit to the receiving unit, making the entire exercise revenue neutral. The company also argued that the issue was detected after expiry of the normal limitation period and therefore invocation of the extended period was not justified. 

The department, however, strongly opposed the contention and pointed out that the ER-1 returns specifically contained a column requiring declaration of credit reversal on goods cleared “as such”. According to the Revenue, non-disclosure in the statutory returns amounted to willful suppression of facts. The department further argued that revenue neutrality was not applicable because no actual reversal had been made, and therefore no corresponding credit could have been availed by the receiving unit. 

The Tribunal observed that the assessee had admitted that reversal of SAD credit was legally required but was not carried out due to inadequate staff knowledge. However, the Bench noted that after the issue was pointed out during the Special Audit, the company still refused to reverse the credit on the ground of limitation. 

Importantly, the Tribunal observed that the receiving unit would not have been entitled to avail credit because the issue had already entered the stage of extended limitation and suppression allegations, thereby attracting restrictions under Rule 9(1)(b) of the CENVAT Credit Rules, 2004. 

The Bench further held that the assessee had consciously avoided payment after detection by the department and had also failed to disclose the transfers in the appropriate column of the ER-1 returns. According to the Tribunal, these facts justified invocation of the extended limitation period and demonstrated intention to evade payment of duty. 

The Tribunal dismissed both appeals and confirmed the order passed by the Commissioner (Appeals). 

Case Details

Case Title: M/s. Thermo Fisher Scientific India Pvt. Ltd. Versus Commissioner of CGST & Central Excise, Belapur

Citation: JURISHOUR-1146-CES-2026(MUM) 

Case No.: Excise Appeal No. 85879 OF 2021

Date: 05.05.2026

Counsel For  Appellant: Mohan V. Paranjape, Consultant

Counsel For Respondent: Rajiv Ranjan, Assistant Commissioner

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