2010 (6) TMI 686 - AT - Central Excise

Summary

Issues Involved:
1. Clandestine clearances of goods to DTA without proper permission and payment of duty.
2. Violation of relevant notifications regarding duty-free imported and indigenous capital goods, machinery, spares, components, and consumables used in granite quarries.
3. Fulfillment of export obligations and Net Foreign Exchange Earning as a Percentage (NFEP).

Detailed Analysis:

1. Clandestine Clearances of Goods to DTA:
The tribunal confirmed that M/s. Madhucon Granites Pvt. Ltd. (MGPL) clandestinely cleared finished products to Varalakshmi Granite Pvt. Ltd. (VGPL) and other places without payment of duty, amounting to Rs. 40,89,824/-. The company failed to prove that the goods were rejects, and the Commissioner's valuation based on private records and statements from MGPL and VGPL executives was upheld. The tribunal also upheld the demand of Rs. 3,78,101/- for clearances of sawn slabs to VGPL, as MGPL could not produce evidence of job work or obtain permission for such activities.

2. Violation of Relevant Notifications:
The major demand was for the exemption availed on capital goods, machinery, spares, components, and consumables used in quarries, which was contrary to Notification No. 37/2000-C.E. and Notification No. 58/2000-Cus. The tribunal found that MGPL used duty-free goods at quarries for excavation of granite blocks, which were exported directly without being brought to the EOU premises, violating Condition No. 12 of the notifications. The tribunal upheld the demands for central excise and customs duties on both indigenous and imported goods used at quarries.

3. Fulfillment of Export Obligations and NFEP:
MGPL argued that they achieved NFEP and fulfilled export obligations, thus qualifying for the exemptions. The tribunal noted that the Commissioner did not dispute the fulfillment of export obligations but emphasized that the goods exported were not covered by the LOP issued to MGPL before 4-5-2005. The tribunal held that the impugned demands were set aside if the export obligation was fulfilled within the prescribed time frame.

Additional Issues:
- The tribunal found that MGPL was entitled to the benefit of Notification No. 2/95-C.E. for DTA clearances, subject to conditions except for permission from the DC.
- The tribunal remanded the matter for re-quantification of duty and penal liability, considering cum-duty benefits and the Tribunal's decisions in similar cases.
- The appeal by MGPL's Executive Director for vacating the penalty was also allowed by way of remand, linked to the main appellant's duty liabilities.

Conclusion:
The tribunal upheld the demands for clandestine clearances and violations of notifications but set aside the demands related to export obligations fulfillment, remanding the case for re-quantification and further adjudication. Both appeals were allowed by way of remand.