The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the rejection of CENVAT credit of excise duty demand on the manufacture of drugs on the ground of limitation.
Ind-Swift Laboratories, the respondent-assessee took central excise registration declaring to manufacture medicines and availed CENVAT credit on capital goods, inputs, and input services and obtained registration for payment of Service Tax on Scientific and Technical Consultancy Services on 02.02.2007.
The revenue appealed against the order passed by the Commissioner (Appeals) for rejecting the recovery of the availed CENVAT credit of Rs. 74,71,109/-.
Surjit Bhadu, the counsel for the assessee contended that the assessee had placed on record a certificate from the Chartered Engineer to certify that the machinery installed in the premises of the assessee is capable of carrying out manufacturing activity and the certificate was relied upon by the adjudicating authority while deciding the present matter.
He further submitted that the Revenue had only relied upon the alleged comments of the senior scientist of the assessee that the unit was only designed for research work and not for manufacturing.
Aneesh Dewan, the counsel for the department contended that the CENVAT credit was ab initio and not admissible because the registration for Scientific and Technical Consultancy Services was obtained in 2007 and the Scientific and Technical Consultancy Services were provided by the assessee to its units and therefore, the services to oneself was not taxable service.
The Bench observed that the show cause notice was, therefore, bad in law both on merits and limitation and no CENVAT credit can be recovered from the notices under the show cause notice.
The two-member bench comprising S S Garg (Judicial) and Anjani Kumar (Technical) upheld the rejection of recovery of CENVAT credit availed by the assessee.
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