TMI Blog2014 (7) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... 875/2007 is filed by M/s Darshak Ltd. (Now known as Alembic Ltd.) while Appeal No. E/876/2007 is filed by M/s Nirayu Pvt. Ltd. 2. Since in both the appeals the issue is common, they are being disposed of by a common order. 3. The brief facts that arise for consideration are as under: 3.1 That the Appellant companies are engaged in manufacture of pharmaceutical products falling under chapter 28 and 29 of the schedule to the Central Excise Tariff Act, 1985. 3.2 During the period 01.07.1997 to 31.08.2001 M/s Darshak had sent various inputs and partially processed inputs to M/s Nirayu and M/s Paushak which are their sister concern on returnable gate pass. Further M/s Nirayu had issued invoice for duty amounting to ₹ 13,50,294/- for Platinum material cleared to M/s Darshak Ltd in the past and M/s Darshak availed credit of the same. M/s Darshak was issued show cause notice dt.28.10.2002 proposing demand of duty of ₹ 34,77,285/- on clearance of input as such alleging that the said inputs were not received back by M/s Darshak. It was also proposed to recover cenvat credit amounting to ₹ 8,80,184/- on clearances of input as such for job work not received back b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Act, 1944 readwith Rule 57I, 57AH, Rule 13 of Central Excise Rules, 1944 and CENVAT Credit Rules, 2001/2002. The Adjudicating authority also imposed penalty of ₹ 1,00,000/- each on M/s Nirayu and M/s Paushak under Rule 209A of the Central Excise Rules, 1944/Rule 26 of the Central Excise Rules, 2001 in case of show cause notice issued to M/s Darshak Ltd. In case of SCN issued to M/s Nirayu, a penalty of ₹ 1,00,000/- each was imposed on M/s Darshak, M/s Alembic and M/s Paushak under Rule 209A of the Central Excise Rules, 1944/ Rule 26 of the Central Excise Rules, 2001/2002. 3.5 Aggrieved with the orders dt.25.06.2004 both the Appellants filed appeal before the Tribunal who vide order 12.07.2005 in respect of M/s Darshak Ltd. confirmed demand of ₹ 50,03,165/-, however allowed credit of such duty to the recipient units namely M/s Nirayu and M/s Paushak in respect of inputs received by them. The Tribunal also ruled that the penalty of ₹ 50,03,165/- imposed upon M/s Darshak and of ₹ 1,00,000/- each imposed upon M/s Nirayu and M/s Paushak are unduly harsh in view of the fact that removal of duty paid inputs are accounted for in the private records o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants aggrieved with the aforesaid Orders have filed the present appeals. 3.11 The Tribunal vide stay order dt.23.082007 ordered for pre-deposit of 50% amount of the interest liability. The Appellants filed application for modification of the stay order on the basis of new/ additional grounds. The Appellants sought permission for introduction of following new grounds: a) Rule 57 I/57AH were not in existence in the statute book when the show cause notices were issued as the said rules have been substituted by rules 57AA to 57AK w.e.f.31/3/2000. b) Section 37 of the Central Excise Act does not vest any power to levy interest in case of denial of modvat credit. c) Whatever payment made by the applicants as duty earned as credit simultaneously and immediately by the receiving units of M/s Alembic group and hence the entire exercise is a revenue neutral one. d) Interest is an appendage or an accessory to the principal w.e.f. 01/04/2000, as per the amended rules 57AC manufacturer has to pay an amount equal to the duty leviable on the inputs. Inasmuch as what has paid is neither duty nor Cenvat Credit, the question of charging interest on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e neutral which again shows that the Tribunal agreed with the grounds raised by the Appellant that the issue is revenue neutral. That it is undisputed that goods cleared to the sister concerns were used in manufacture of dutiable goods and the duty payment by the sister concern makes the whole situation revenue neutral. The Ld. Counsel cites following judgments to canvass his point of revenue neutrality and states that in such case no penalty under section 11AC and interest under section 11AB can be demanded from them: i) CC. EX. CUS., VAD. Vs. INDEOS ABS LTD. 2010 (254) E.L.T. 628 (Guj.) ii) CCE, CHENNAI Vs. S S POWER SWITCHGEAR LTD.2009 (247) E.L.T. 374 (Tri. - Chennai) iii) HIND. ZINC LTD. Vs.CCE, JAIPUR-II 2008 (232) E.L.T. 687 (Tri. - Del.) iv) CCEX., PUNE Vs. COCA-COLA INDIA PVT. LTD. 2007 (213) E.L.T. 490 (S.C.) 5. Ld. Advocate further submits that since the issue is revenue neutral and the Tribunal did not find it a case to be of fraud, collusion, wilful mis-statement, or suppression of fact or contravention with intent to evade payment of duty, therefore even if any interest under Section 11AB is leviable, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilability of credit to the recipient units is undisputed and thus the whole issue is revenue neutral. He submits that in view of the fact that the whole issue is revenue neutral, there is no reason to demand interest under section 11AB. The Ld. Counsel would further take us to the judgment of the Hon ble Supreme Court in the case of PUNJAB TRACTORS LTD. Vs. CCE, CHANDIGARH 2005 (181) E.L.T. 380 (S.C.) and seeks to draw parallel between the facts of the said case and the present issue. He states that the Hon ble Apex Court considering the situation of revenue neutrality imposed penalty under Rule 173 Q of erstwhile Central Excise Rules, 1944 and Rule 25 of Central Excise Rules 2002 and therefore the imposition of penalty in the present case by the Tribunal cannot be inferred as imposition due to any fraud or willful intention to evade payment of duty. 7. It is his submission that the reference answered by the Hon ble Larger Bench is not related/ applicable in the facts of the present case as the Larger Bench s order is related to issue as to whether in cases involving fraud, collusion, suppression or mis-statement the liability under section 11AB for interest gets wiped out after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable gate passes but did not reverse the credit or paid duty. After the issue of show cause notice, the demands were confirmed against the Appellant as well as equivalent amount of penalties were imposed. The Tribunal vide order dt.12.07.2005 though upheld the demands, allowed the credit of such demands to the recipient units. Also considering the case to be of contravention of rules and holding the penalties to be too harsh in view of the fact that the entries of clearances were recorded in the private records of the Appellant reduced the penalties. The Tribunal in subsequent order dt.22.10.2007 also admitted the additional grounds introduced in the Appeal for ascertaining the revenue neutrality. On consideration of the above facts we find that as the Tribunal in its order dt.12.07.2005 had allowed the credit of the duty paid by the Appellants to the recipients units which are sister concern of the Appellants, we are of the view that the whole issue becomes revenue neutral and in such cases there is no reason to hold the non-payment of duty can be attributed to any fraud, collusion or willful mis-statement. Our views are based upon the judgment of Hon ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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