Commissioner Of CGST And Cx, Kolkata South Commissionerate, Kolkata vs. M/S. East INDIA Pharmaceutical Works Limited

Facts

This case involves an appeal by the Commissioner of CGST and CS, Kolkata South Commissionerate against an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata. The CESTAT had allowed an appeal filed by the respondent assessee, M/s. East India Pharmaceutical Works Limited. The Tribunal found that the goods in question were transferred by the assessee to its sister unit, and the duty amount demanded was available as credit in the sister unit under the Cenvat Credit Rules, leading to a revenue-neutral situation. The Tribunal relied on several previous decisions, including those affirmed by the Supreme Court, to hold that there was no justification for the demand of duty in such circumstances. The Tribunal also found that a CBEC Circular relied upon by the Commissioner was not relevant to the present case.

Held

The High Court held that the impugned order of the Tribunal does not give rise to any substantial question of law. The Court found that the controversy raised by the appellant (Commissioner) was concluded by the judgments mentioned in the Tribunal's order itself. Specifically, the Tribunal's finding that the transfer of goods to a sister unit, where the duty amount is available as credit, leads to a revenue-neutral situation and thus no duty demand is justified, was considered to be well-reasoned and supported by precedent. The Tribunal's rejection of the CBEC Circular was also deemed appropriate. Since no substantial question of law was involved, the appeal was dismissed at the admission stage.

Key Issues

1. Whether the CESTAT erred in allowing the appeal of the assessee, holding that the transfer of goods to a sister unit, where the duty amount is available as credit, results in a revenue-neutral situation and thus no duty demand is justified, in light of the principles laid down in cases like Anglo-French Textiles and Special Steel Limited (Question of law). 2. Whether the CESTAT correctly disregarded CBEC Circular No. 940/01/2011 dated January 14, 2011, finding it irrelevant to the present case where the goods were not enjoying exemption under Section 5A of the Central Excise Act, and considering the observations in Neuland Laboratories (Question of law). Contentions: Petitioner (Commissioner of CGST and CS): The appeal was not pressed by the appellant. However, the judgment implies the appellant sought to challenge the CESTAT's order by filing an appeal before the High Court. Respondent (M/s. East India Pharmaceutical Works Limited): The respondent assessee was represented by counsel. The CESTAT's order, which was in favor of the assessee, was based on the principle of revenue neutrality and the inapplicability of the cited circular.