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2019 (1) TMI 1099 - AT - Central Excise100% EOU - entitlement of the appellant to exemption from duty in the procurement of material for manufacture of goods - penalty u/s 11AC of CEA - chapter 9 of EXIM Policy 1997-2002 notified by Director General of Foreign Trade under the Foreign Trade (Development & Regulation) Act, 1992 for the period from 24th June 2002 to 1st January 2004 - the relevant notification, issued under section 5A of Central Excise Act, 1944, was amended to deprive duty exemption to ‘trading units.’ Held that:- The liability to make good the duty foregone, in the event of ineligibility for procurement without payment of duty, is conclusive. The appellant also has bound itself, through the letter of undertaking, to observe the conditions of the exemption notification. Failure to comply is to be visited with the recovery of duty as undertaken in the bond. The provisions of section 11A of Central Excise Act, 1944 are not the sole source of recovery. The contract in the bond is sufficient to do so - Even if it is conceded that central excise officials were aware of the ineligibility of the appellant and recourse to section 11A of Central Excise Act, 1944 is not available, considering the circumstances of ineligibility and the commitment under the bond, demand of duty of ₹ 18,47,929 must be upheld. Considering that there is no demonstrated mala fide in the actions of the appellant continuing to avail the benefit of exemption despite lack of coverage in the relevant notification, and probably under the impression of continuity of the privileges attached to Letter of Permission that was not invalidated, the invoking of section 11AC of Central Excise Act, 1944 does not appear to be appropriate. Penalty set aside while demand of duty upheld - appeal allowed in part.
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