The Customs, Excise & Service Tax Appellate Tribunal, New Delhi, observed that the duties can be charged if excisable goods are manufactured or produced in india.
The Division bench of Justice Dilip Gupta, President And P.V. Subba Rao, Member (Technical) observed that the Commissioner confirmed that the appellant had imported edible grade lactose. He did not record any finding nor produced any evidence that the appellant had the facility to manufacture edible grade lactose let alone that it had manufactured edible grade lactose. He only confirmed the demand on the ground that the appellant had cleared edible grade lactose from the factory.
The bench noted that if the appellant imported edible grade lactose, took it into the factory and got some portion processed through a job-worker into pharma grade lactose and sold the rest, the edible grade lactose would have been taken out of the factory.
The appellant manufactured pharmaceutical products and was registered with the Central Excise department and has been paying Central Excise duty.
It was also availing credit of CENVAT on the inputs and input services which it had procured. Based on an audit report, a show cause notice was issued to the appellant covering the period September 2009 to May 2010 demanding Central Excise duty under the proviso to section 11AC(1) of the Act on the edible lactose cleared by it. It was also proposed to demand interest and impose penalties.
The appellant resisted the proposals in the SCN which were, however, confirmed by the Commissioner by an order.
The appellant assailed the order on the ground that it had not manufactured but imported edible lactose on which it availed CENVAT credit and sent it for processing to a job worker. Some of the lactose was so processed by the job worker and the rest was returned to the appellant. Thereafter, the appellant sold the edible lactose after reversing the CENVAT credit which it had availed.
By order the Tribunal set aside the Commissioner‘s order and remanded the matter with a direction to examine the nature of the lactose imported by the appellant- whether it was edible or not- and decide the matter afresh after giving a reasonable opportunity to the appellant to present its case. The Commissioner passed the order impugned in this appeal in pursuance of the remand order.
The bench stated that the issue to be decided is whether the appellant was liable to pay CENVAT on the edible lactose which it had cleared or not.
The bench said that in the first round of litigation, the Tribunal wanted the fact checked whether the appellant had imported edible grade lactose. The reason is that the charge against the appellant is that it cleared edible grade lactose. If it had imported edible grade lactose, took it into its factory and later cleared edible grade lactose, it can only be clearance of the input which it had imported.
The Tribunal observed that as seen from Section 3 of the Act, the charge of duty of excise is on manufacture or production of excisable goods and not merely on clearing them. The Commissioner lost sight of the charging section of the Act and confirmed the demand without establishing through any evidence that the appellant had manufactured edible grade lactose.
The bench quashed and set aside the Order.
Case Details
Case Title: M/s Rajasthan Antibiotics Ltd. v/s Commissioner of CGST
Citation: Excise Appeal No. 53823 OF 2018
Counsel for the Appellant: G.K. Sarkar and Prashant Srivastava
Authorised Representative for the Respondent: Shiv Shankar
