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2022 (2) TMI 22 - AT - Customs100% EOU - demand of customs duty on the raw material imported duty free - clearance of finished goods, sized yarn and polyester knitted fabrics in DTA without having any permission from the Development Commissioner - denial of exemption notification under which raw material was allowed to be imported duty free - failure to fulfil the condition of exemption Notification no. 52/2003-Cus dated 31.03.2003 - time limitation - HELD THAT:- There is no dispute in the fact that though the appellant have not obtained the permission from Development Commissioner for removal of goods in DTA but the appellant have paid full duty on the finished goods wherein, such imported raw material have been consumed. In case of 100% EOU, as per the policy, the appellant is required to clear the finished goods for export and if any part of the finished goods cleared in DTA, they are required to pay the excise duty equivalent to all customs duty. As per this policy in respect of DTA clearances, the customs duty which was forgone at the time of import of raw material gets subsumed in the excise duty paid on the finished goods at the time of clearance in DTA therefore, the customs duty which was forgone at the time of import stands paid in the form of excise duty on the finished goods. Once the duty free raw material got consumed in the manufacture of final product and the final product is cleared on payment of excise duty then demanding of customs duty on the raw material shall amount to double payment of duty. In the facts of the present case as the appellant have paid the full excise duty on the finished goods wherein, the raw material imported duty free has been consumed, no duty of customs can be demanded on such raw material - The issue has been considered in various judgments as cited by the appellant. In the case of COMMISSIONER OF C. EX. & CUSTOMS VERSUS SURESH SYNTHETICS [2007 (8) TMI 33 - SUPREME COURT] it was held by the Apex Court that customs duty is not sustainable on the raw material when the finished goods have been cleared on payment of excise duty in DTA. Thus, it is settled that once in the 100% EOU the raw material imported duty free is used in the manufacture of final product and final product is cleared on payment of duty in DTA, for any reason the customs duty on the raw material which was used in the finished goods cannot be demanded therefore, the demand of Customs duty on this ground is clearly not sustainable. Time Limitation - HELD THAT:- The department has not raised any objection at the relevant time, it is only subsequently on scrutiny of ER-2 return were carried out. There is no change of circumstances at the time of clearance of goods, filing of ER2 return and the verification of the same at the later stage therefore, there is absolutely no suppression of fact or mis-declaration with intend to evade payment of duty on the part of the appellant - the extended period of demand cannot be invoked hence the demand for extended period is not sustainable on limitation also. In the present case since there is no suppression of fact on the part of the appellant as all the informations were available to the department in the form of ER2 return, the demand for extended period is not sustainable - Appeal allowed - decided in favor of appellant.
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