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2025 (5) TMI 454 - AT - Central Excise100% EOU - benefit of exemption from BCD under N/N.25/1999-Cus. dated 28.02.1999 NN/N.24/2005-Cus. dated 01.03.2005 - exemption from CVD under N/N. 6/2006-CE (List 5) - exemption from SAD under N/N.12/2012-CE (List-8) dated 17.03.2012 - extended period of limitation. HELD THAT - Admittedly appellants are not entitled to the benefit of Notification No.52/2003-Cus. dated 31.03.2003 and Notification No.22/2003-CE dated 31.03.2003 on parts which were used in the manufacture of SPV module cleared to DTA. However appellant had claimed exemption on the said parts from BCD under alternative exemption Notifications No.25/1999-Cus. dated 28.02.1999 and Notification No.24/2005-Cus. dated 01.03.2005; also they claimed benefit of exemption under Notification No.6/2006-CE dated 01.03.2006 and Notification No.12/2012-CE dated 17.03.2012 from additional duty of customs (CVD) and SAD. On the admissibility of benefit of N/N.06/2006-CE dated 01.03.2006 and N/N.12/2012-CE dated 17.03.2012 this Tribunal in the case of HHV Solar Technologies 2024 (10) TMI 46 - CESTAT BANGALORE observed the claim of the appellant that benefit of Notification No.6/2006-CE dated 01.03.2006 and No.12/2012-CE dated 17.03.2012 to the parts procured and used in the non-conventional devices or systems specified in List 5/List 8 of the respective Notifications as the case may be cannot be allowed and the Commissioner has rightly denied the benefit of the said exemption Notifications. Thus the appellants are not eligible to the benefit of exemption from Additional Customs Duty CVD under Notification No.6/2006-CE dated 01.03.2206 and Notification No.12/2012-CE dated 17.03.2012. Consequently the Appellants are also not eligible to exemption from SAD. Admissibility of N/N.25/1999-Cus. dated 28.02.1999 and N/N.24/2005-Cus. dated 01.03.2005 - HELD THAT - This Tribunal in similar circumstances in HHV Solar Technologies Pvt. Ltd. 2024 (10) TMI 46 - CESTAT BANGALORE after recording that the appellant could claim the said Notification as an alternative argument even if they had not claimed earlier remanded the matter to the adjudicating authority to examine the admissibility of the benefit of the said Notifications. The adjudicating authority examined threadbare various conditions of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996 and the procedure followed by a 100% EOU in receiving raw materials its utilization and clearances of the manufactured goods etc. and finally arrived at the conclusion that there is substantial compliance with the conditions contained under the said Rules by an 100% EOU hence eligible to the benefit of the said Notification - there are no discrepancy in the reasoning recorded by the learned Commissioner in extending the benefit of Notification No.25/1999-Cus. dated 28.02.1999 and Notification No.24/2005-Cus. dated 01.03.2005. The said order of the Adjudicating Authority has been accepted by the Department. Thus applying the said reasoning and conclusion to the present case and also for the sake of uniformity in assessment the benefit of the said Notifications cannot be denied to the Appellant. Extended period of limitation - HELD THAT - The appellant is a 100% EOU and the receipt and disposal of the raw material had been duly recorded in the statutory records prescribed and the present issue relates to admissibility of alternate exemption Notification No.25/1999-Cus. dated 28.02.1999 and Notification No.24/2005-Cus. dated 01.03.2005 and also benefit of Notification No.6/2006-CE dated 01.03.2006 and Notification No.12/2012-CE dated 17.03.2012 claimed by the appellant on the basis of the records maintained therefore allegation of suppression or mis-declaration of facts in our view cannot be sustained. Thus invoking extended period of limitation to confirm the demand cannot be sustained. Consequently imposition of penalty and confiscation on the same reasoning also cannot be sustained. Conclusion - The Appellants are entitled to the benefit of exemption from BCD under Notification No.25/1999-2015-Cus. dated 28.02.1999 and Notification No.24/2005-Cus. dated 01.03.2005 but not to the benefit of CVD under Notification No.06/2006-CE dated 01.03.2006 and Notification No.12/2012-CE dated 17.03.2012 and consequently SAD is also inadmissible. The demand be re-determined for CVD and SAD with interest for normal period of limitation. Penalties imposed are set aside. Appeal disposed off by way of remand.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to exemption from BCD under Notification No.25/1999-Cus. and Notification No.24/2005-Cus. Relevant legal framework and precedents: The Notifications provide exemption from BCD on specified goods imported for manufacture of excisable goods, subject to compliance with the IGCR Rules, 1996. The IGCR Rules require proper accounting, bonding, and utilization of imported goods for manufacture. The Directorate General of Export Promotion (DGEP) Circular dated 09.02.2007 clarified that EOUs substantially comply with these Rules and are eligible for exemption benefits. The Tribunal in the case of M/s. HHV Solar Technologies vs. CCE, Bangalore, had remanded similar issues for adjudication on alternative exemption claims. Court's interpretation and reasoning: The Tribunal observed that EOUs follow procedures akin to non-EOUs under IGCR Rules, including registration, bonding, maintenance of accounts, and filing returns. The adjudicating authority had found substantial compliance with IGCR Rules by the appellants. There was no allegation of procedural non-compliance or misuse of duty-free imports. The Tribunal accepted the reasoning that substantial compliance suffices for exemption eligibility. Key evidence and findings: The appellants maintained statutory records, filed ER-2 returns regularly, executed bonds, and accounted for the imported inputs properly. There was no dispute that imported goods were used in manufacture of Solar Photovoltaic Modules. Application of law to facts: Applying the DGEP Circular and the adjudicating authority's findings, the Tribunal held that the appellants are entitled to claim exemption under Notification No.25/1999-Cus. and Notification No.24/2005-Cus. as an alternative to the benefit under Notification No.52/2003-Cus. and Notification No.22/2003-CE, which they were found ineligible for. Treatment of competing arguments: The Revenue did not dispute the substantial compliance but had denied exemption benefits based on strict interpretation of notifications and procedural requirements. The Tribunal favored a purposive approach recognizing substantial compliance by EOUs. Conclusion: The appellants are entitled to exemption from BCD under Notification No.25/1999-Cus. and Notification No.24/2005-Cus. Issue 2: Entitlement to exemption from CVD under Notification No.6/2006-CE and SAD under Notification No.12/2012-CE Relevant legal framework and precedents: Notification No.6/2006-CE (List 5) and Notification No.12/2012-CE (List 8) provide exemption from excise duty and consequential CVD and SAD on specified non-conventional energy devices and parts. However, exemption for parts is restricted to those "consumed within the factory of production of such parts" for manufacture of goods specified in the lists. The Tribunal in HHV Solar Technologies and other cases (e.g., M/s. Sova Solar Ltd., Jupiter International Ltd.) held that parts procured from outside the factory do not qualify for exemption. The Supreme Court's principle of strict construction of exemption notifications was reiterated. Court's interpretation and reasoning: The Tribunal analyzed the language of the notifications and noted the clear legislative intent to restrict exemption to parts manufactured and consumed within the factory. The expression "parts consumed within the factory of production of such parts" was held to be unambiguous. The Tribunal emphasized that exemption notifications must be strictly construed and ambiguity benefits the revenue. The Tribunal relied on the Supreme Court's ruling in Commissioner of Customs vs. M/s. Dilip Kumar and Ors. which laid down principles of statutory interpretation emphasizing legislative intent and strict construction of exemption notifications. Key evidence and findings: The appellants procured parts from outside sources; hence, the exemption for parts manufactured and consumed within the factory did not apply. The Tribunal also referenced deletion of the relevant exemption clause from Notification No.12/2012-CE after 11.07.2014. Application of law to facts: Since the appellants' parts were procured externally and not manufactured in-house, exemption from CVD and SAD under the said notifications was denied. Consequently, CVD and SAD demands were held to be valid. Treatment of competing arguments: The appellants argued for a liberal construction of the notifications based on the purpose of promoting renewable energy and substantial eligibility. The Tribunal rejected this, holding that the plain and unambiguous language must prevail over policy considerations. Conclusion: The appellants are not entitled to exemption from CVD under Notification No.6/2006-CE and Notification No.12/2012-CE, and consequently, not entitled to exemption from SAD. Issue 3: Applicability of extended period of limitation Relevant legal framework and precedents: Extended limitation periods apply where there is suppression of facts or mis-declaration. The appellants contended that they maintained proper records and regularly filed returns, negating any suppression. The Tribunal referred to the principle that limitation cannot be extended without evidence of concealment. Court's interpretation and reasoning: The Tribunal found no allegation or evidence of suppression or mis-declaration. The appellants' compliance with statutory requirements and transparency in records supported the conclusion that the normal period of limitation applies. Application of law to facts: The demand for the period April 2010 to April 2013 was held to be barred by extended limitation. Normal limitation period applies to the demands. Conclusion: Extended period of limitation is not applicable; demands beyond normal limitation period are barred. Issue 4: Sustainability of penalties and confiscation Relevant legal framework and precedents: Confiscation under Section 111(o) of the Customs Act requires seizure under Section 110. Penalties under Section 112 require valid demand and proper procedure. The appellants submitted that no seizure occurred and that reversal of cenvat credit was made where applicable. Court's interpretation and reasoning: The Tribunal observed that confiscation without seizure is not sustainable. Penalties are not imposable where there is no suppression or mis-declaration and where demands are barred or reduced. The Tribunal referred to precedent where penalties were set aside in absence of seizure or concealment. Application of law to facts: Since no seizure was made and the appellants reversed proportionate cenvat credit, penalties and confiscation orders were set aside. Conclusion: Penalties and confiscation imposed are not sustainable and are set aside. Issue 5: Compliance with IGCR Rules by EOUs and entitlement to alternative exemption notifications Relevant legal framework and precedents: IGCR Rules prescribe procedural safeguards for duty-free imports. The DGEP Circular clarified that EOUs substantially comply with these rules. The Tribunal in HHV Solar Technologies held that substantial compliance by EOUs suffices for exemption eligibility. Court's interpretation and reasoning: The Tribunal accepted that EOUs, by virtue of their registration, bonding, accounting, and filing returns, fulfill the essence of IGCR Rules. The Tribunal emphasized uniformity in assessment and the principle that alternative exemption claims can be considered even if not initially claimed. Application of law to facts: The appellants' procedural compliance was found satisfactory; hence, they were entitled to claim exemption under alternative notifications. Conclusion: The appellants substantially complied with IGCR Rules and are entitled to exemptions under alternative notifications. 3. SIGNIFICANT HOLDINGS "It is evident from the above that the procedures required to be followed by a 100% EOU and a non-EOU availing the benefit of duty free exemption aims at ensuring that the goods imported duty free are received in the premises of the manufacturer, are accounted for properly and most important are utilized for the purpose for which they have been imported. In the case of an EOU, the monitoring of the receipt of the duty free imported goods is done by the Customs/Central Excise Officers at the time of bonding of the imported goods. The EOU as well as the non-EOU executes a bond covering the duty on the imported goods. In both cases, the EOU as well as the non-EOU maintain a proper account of the goods imported, its utilization and balance in stock is maintained which is subject to verification by the Customs authorities or the Central Excise officer respectively. Further, in the case of both EOU and non-EOU, monthly returns are filed with the Central Excise Officer. Therefore, it is evident, from the above that procedures followed by the EOU assessees are similar to the procedures followed by Non-EOUs under the Customs (IGCRDMEG) Rules." "An exemption notification has to be strictly construed... The expression mentioned under Sl. No.21 of List 8 (Notification No.12/2012) is unambiguous and the intention of the legislature is clear; it refers to parts consumed within the factory of production of such parts for the manufacture of the goods specified at Sl. No. 1 to 20 above... If the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences." "Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue." Final determinations:
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