Relief for Sun Pharma Lab: CESTAT Grants Excise Duty Refund of Rs. 64.32 Cr Despite Citing Incorrect Exemption Notification [Read Order]
CESTAT allowed Sun Pharma’s refund of Rs. 64.32 crore with interest, ruling that a refund cannot be denied just because the wrong notification was mentioned.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted the excise duty refund of Rs. 64.32 crore along with interest, holding that the refund could not be denied merely because the company mentioned an incorrect exemption notification when its eligibility under the correct notification was not in dispute.
Sun Pharma Laboratories Limited, the company that appealed, runs a manufacturing unit in Sikkim and was eligible for area-based exemption from excise duty. For the period from February 2016 to January 2017, the company filed refund claims for excise duty paid in cash, totaling Rs. 64.32 crore.
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The company mistakenly mentioned Notification No. 56/2003-CE while filing these claims but the correct one for that time was Notification No. 20/2007-CE. The department rejected the claims because Notification No. 56/2003-CE did not apply to that period. The initial orders rejected the claims and the Commissioner (Appeals) agreed with that. Unhappy with this, Sun Pharma approached the CESTAT.
The appellant’s counsel argued that the reference to Notification No. 56/2003-CE was an inadvertent clerical error. They argued that the appellant satisfied all conditions prescribed under Notification No. 20/2007-CE and was otherwise fully eligible for the refund.
The counsel further argued that both notifications were identical in terms of conditions and benefits and differed only with respect to the period of operation. The appellant’s counsel also relied on an earlier decision of the Tribunal in its own case on the same issue, where recovery of refunds was set aside.
The revenue representative supported the findings of the lower authorities and argued that the refund claims were filed under an inapplicable notification. However, the revenue fairly argued that the issue involved was identical to the one already decided by the Tribunal in the appellant’s earlier case.
The two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that a comparison of Notification No. 56/2003-CE and Notification No. 20/2007-CE showed that the conditions imposed and benefits granted under both notifications were the same. ThetTribunal observed that Notification No. 20/2007-CE was issued to continue the same incentive scheme for industrial units in Sikkim for a later period.
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The tribunal explained that the legislative intent was to extend identical benefits to eligible units and that there was no dispute regarding the appellant’s compliance with the conditions of Notification No. 20/2007-CE. The tribunal pointed out that the case involved only a wrong mention of the notification number and not a lack of eligibility.
The tribunal relied on the Supreme Court decision in Share Medical Care v. Union of India and explained that an assessee is not barred from claiming the correct exemption merely because a wrong notification was cited initially. According to the Tribunal, substantive benefits cannot be denied due to technical or procedural mistakes when eligibility is otherwise established.
In view of these findings, the tribunal set aside the impugned orders and allowed the appeals. The adjudicating authority was directed to grant the refund of Rs. 64.32 crore along with interest at the rate of 6 percent after three months from the date of filing of the original refund claims and to process the refunds expeditiously.
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