Per: Justice Ajit Bharihoke (Oral):
1. M/s Panacea Biotech Ltd., New Delhi, the appellant herein, is engaged in the manufacture of pharmaceutical products falling under Chapter Heading 3003.10 of the Schedule to the Central Excise Tariff Act, 1985. The unit is registered with the Central Excise Department. The appellant has been availing cenvat credit under Rule 3 of Cenvat Credit Rules, 2002.
2. Central Excise Officers of Division VI of Anti-Evasion visited the unit of the appellant on 18.11.2003. During the scrutiny of the records maintained by the appellant it was found that during the period 1.4.2003 to 18.11.2003, the appellant has cleared pharmaceutical products of two categories i.e. exempted and the dutiable. It was also found that the appellant had availed cenvat credit of duty paid under Rule 3 of Cenvat Credit Rules on the inputs used in or in relation to the manufacture of dutiable as well as the exempted final product. However, the appellant has neither maintained separate inventory or accounts for use of inputs in the manufacture of the respective categories nor paid an amount equal to 8% of the value of the exempted final product cleared from the factory during the aforesaid period. Accordingly, a show cause notice raising demand of Rs.65,96,620/- was served on the appellant. Notice also propose to impose penalty.
3. The Commissioner, Central Excise, Delhi II after hearing the parties vide order in original dated 30.4.2003 confirmed the duty demand of Rs.65,96,620/- with interest and also imposed penalty of Rs.50,000/-.
4. It is against the aforesaid order in original the appellant has preferred appeal before the Tribunal.
5. Shri B.L. Narasimhan, ld. Advocate for the appellant submitted that at the time of receipt of inputs, the appellant had no occasion to know as to what extent those inputs would be used for manufacture of the dutiable or exempted final product. Thus the appellant availed the cenvat credit on the entire inputs as and when those were received in the unit. However, as and when the inputs were issued from the stock for production of the exempted products, an amount corresponding to the cenvat credit availed on those inputs was debited by the appellant in the cenvat credit account. Ld. Counsel submitted that there was no justification on the part of the Department to demand 8% of clearance value of the exempted products under Rule 6(3) of the Cenvat Credit Rules.
6. Ld. Counsel further submitted that Cenvat Credit Rule 6(3) was amended vide Finance Act, 2010 retrospectively and by way of said amendment an option was given to the manufacturer of dutiable or exempted goods not to maintain separate account for inputs that he should pay an amount equal to 8% of value of exempted goods or pay an amount as determined under sub-rule 3A. Ld. Counsel submitted that sub-rule 3A(b) provides that the manufacturer of the goods of both the categories shall determine and pay the amount equivalent to cenvat credit attributable to the inputs used in or in relation to the manufacture of exempted goods on proportionate basis; that the appellant had been regularly reversing the cenvat credit in relation to the inputs used for manufacture of exempted final product. As such, he is entitled to the benefit of the amendment brought in by the Finance Act, 2010. In support of this plea, ld. Counsel has relied upon the judgment of Gujarat High Court in the matter of Shree Rama Multi Tech Ltd. vs. UOI (2011 (267) ELT 153 (Guj.).
7. Shri Nagesh Pathak, learned DR for the Revenue has fairly conceded that in view of retrospective amendment brought into Cenvat Credit Rules vide Finance Act, 2010, the appeal needs to be remanded back to the adjudicating authority for de novo adjudication in the light of the Rule 6 of Cenvat Credit Rules as amended by Finance Act, 2010.
8. In view of the above, we set aside the impugned order and remit back the matter to the Commissioner Adjudication for deciding the matter afresh after taking into account evidence relating to cenvat credit and also making assessment of interest payable.
9. Appeal is disposed of in the aforesaid terms.