Court upheld the use of Cenvat credit for excise duty by an EOU upon de-bonding, rejecting claims for cash payment.

ORDER :

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. Admit. Learned Advocate Mr.Modh waives service of notice of admission on behalf of the respondent. At the outset, learned advocates appearing for the respective parties have submitted that the issue is squarely covered by the decision of this Court dated 18.12.2024 passed in Special Civil Application No.14949 of 2015 in the case of Messrs dishman Pharmaceuticals and Chemicals Pvt. Ltd. And Anr. Vs. Union of India and Anr.

2. Learned advocate Mr.Shah appearing for the appellant at the outset, has submitted that when the matter was admitted and impugned order was challenged, the Customs, Excise & Service 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 legal provisions… … ….

C. The CERA Audit noted that the respondent had paid the countervailing duty amounting to Rs. 8,30,90,677/- by utilizing Cenvat credit for imported raw material lying in stock instead of payment through customs duty through challan in the heads of customs. It is alleged that the respondent has contravened the following provisions of law:

i. Section 668 of the Customs Act, 1962 read with Notification No. 52/2003-cus dated 31.03.2003 in as much as they failed to pay duties of Customs on the imported material, which were de- bonded; and ii. Cenvat Credit Rule 3(4) of the cenvat Credit Rules, 2004 in as much as they had utilized Cenvat credit for inadmissible purpose.

D. Accordingly, a show cause notice No. V/Cus/SPIL/H- I/Adj/Commr/44/2015-16 dated 15.07.2015 was issued to the respondent for non-payment of customs duty of Rs. 8,30,90,677/- under section 28 of the cystoms Act, 1962 along with applicable interest and penalty. Also a show cause notice was given to Mr. Manoj Kanojia (Assistant Manager in the unit) for penalty under section 117 of the Customs Act, 1962 … … ….

E. The respondent contended that they were a manufacturer of exisable goods under the Central Excise law. As per Section 3 of the Central Excise Act, 1944 & Notification no 23/2003 – CF dated 31-03- 2003 as amended, the respondent is liable to pay Excise duty under Section 3 of the Central Excise Act, 1944 andnot custom duty under Section 28 of the Customs Act, 1962. That the respondent is liable to pay the excise duty and the computation of excise duty is equal to the aggregate duty of customs duty. It is only the method of computing the excise duty but it is ot a customs duty. The respondent further relied upon the case of M/s. Dishman Pharmaceuticals and Chemicals Pvt. Limited vs. UOI- 2015- TIOL-2869- HC-AHM-CX.

F. The respondent also stated that the period involved in the instant matter pertains to 2012-13 and the show cause notice has been issued on 15.07.2015 i.e. after lapse of mor