TMI Blog2010 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... and the afore-extracted Circular issued by the Board following the said decision, Excise Duty on such sales is chargeable under main Section 3(1) of the Act. - Thus, it is evident that even if the stand of the revenue is accepted and shrimp seeds are classified under sub-heading 0301.00 of the Tariff Act, the rate of Excise Duty chargeable would be nil. Similarly, if the Excise Duty payable is nil, the other question regarding the extended period of limitation on the alleged ground of suppression of sales also pales into insignificance. - Revenue appeal dismissed. - 4608-4609 of 2005 - - - Dated:- 24-9-2010 - D.K. Jain and H.L. Dattu, JJ JUDGMENT D.K. Jain, J 1. Challenge in this batch of appeals filed by the revenue under Section 35(L)(b) of the Central Excise Act, 1944 (for short "the Act") is to the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zone (for short "the Tribunal"), inter alia, holding that the duty of Central Excise on shrimps and shrimp seeds produced and removed by the respondent (hereinafter referred to as "the assessee"), a 100% Export Oriented Unit (for short "EOU"), in the Domestic Tariff Area (for short "DTA") wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sold 11,15,29,540 number of shrimp seeds and 48,365 Kgs. of shrimps in DTA without obtaining the permission of the Development Commissioner; without issuing proper invoices as mandated under Rule 100E of Central Excise Rules, 1944 (for short "the Rules") and without payment of Excise Duty. Besides, the assessee also undertook certain job work whereby it processed 864.238 MT of shrimps and 905.580 MT of fish and cleared the said goods in DTA. According to the assessee, these goods were ultimately exported by the DTA units. 6. On 2nd September 1998, a notice was issued to the assessee to show cause as to why duty of excise equal to aggregate of the duties of customs, amounting to Rs.7,80,58,074/-, should not be levied in terms of Section 3 of the Act read with Rule 9(2) read with proviso to sub-section (1) of Section 11A of the Act, and interest at 20% from first day of the month till the date of payment of duty should not be imposed under Section 11AB of the Act. An additional penalty of Rs.7,80,58,074/- for non-payment of duty for the reason of wilful suppression of facts and contraventions of the provisions of the Act, together with additional penalty under Rule 173Q(1) for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planatory notes, we are convinced that Chapter 3 would not cover items unfit for human consumption. In the present case, the Shrimp seeds are undoubtedly not fit for human consumption in that stage. Therefore, it would not be excisable at all. In view of this finding, the demand of duty on the Shrimp seeds cleared would be not sustainable." In relation to the goods cleared on job work basis, the Tribunal held that since goods were cleared to other exporters, there was no duty liability and even otherwise, since the permission of the Development Commissioner was not obtained, its decision in the case of Sam Spintex Ltd. vs. Commissioner of C. Ex., Indore [2004 (163) E.L.T. 212 (Tri.-Del.)] would be applicable. It also held that there being no convincing evidence showing suppression of facts, the demand itself was time barred. 10. Being dissatisfied with the order of the Tribunal, the revenue is before us in these appeals. 11. Mr. R.P. Bhatt, learned senior counsel appearing for the Revenue contended that since as per Note 1 of Section 1 of the Customs Tariff Act, 1975, any reference in that Section to a particular genus or species of an animal, except where the context otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression of DTA sales by the assessee with the intent to evade payment of duty, particularly when the entire industry as also the jurisdictional excise authority were under the impression that no duty was payable on sale of shrimps and shrimp seeds. In support of the proposition that a mere violation of rule is not sufficient to invoke extended period of limitation, learned counsel commended us to the decisions of this Court in M/s Padmini Products vs. Collector of Central Excise, Bangalore [(1989) 4 SCC 275]; Collector of Central Excise, Hyderabad vs. M/s Chemphar Drugs and Liniments, Hyderabad [(1989) 2 SCC 127] and Gopal Zarda Udyog and Ors. vs. Commissioner of Central Excise, New Delhi [(2005) 8 SCC 157]. 13. The core question for our consideration, therefore, is whether the sales of shrimps and shrimp seeds by the assessee in DTA, without requisite permission from the Development Commissioner, are to be assessed to Excise Duty under Section 3(1) of the Act or under proviso to the said Section? 14. Before evaluating the rival contentions on the point, we may refer to the relevant part of Section 3 of the Act, which reads as follows: "3. Duties specified in the Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% EOU Scheme, for which the Ministry accorded the necessary permission. However, some of the goods lying in the unit were removed prior to the debonding. A dispute arose regarding the rate of duty payable on such sales. The plea taken by the assessee was that they were liable to pay duty under Section 3(1) of the Act together with customs duty on the imported raw material used in the manufacture of said finished goods, lying in the stock whereas the stand of the revenue was that Excise Duty under the proviso to Section 3(1) of the Act was payable on the finished goods with no customs duty being leviable on the raw materials used in the manufacture of finished goods. Thus, the bone of contention in that case was also with regard to the interpretation of the expression "allowed to be sold in India" appearing in the said proviso. Interpreting the said expression, this Court held that the expression "allowed to be sold in India" used in the proviso to Section 3(1) of the Act is applicable only to sales made in DTA up to 25% of the production by 100% EOU, which are allowed to be sold into India as per the provisions of the Exim Policy. No permission was required to sell the goods ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured or produced in India for which Section 3 is the charging section. EOUs are also situated in India and the chargeability under Central Excise Act is never in doubt. Therefore, it is clarified that prior to 11-5-2001, the clearances from EOUs if not allowed to be sold in India, shall continue to be chargeable to duty under main Section 3(1) of Central Excise Act, 1944. Appropriate action may be taken immediately to safeguard revenue and all pending decisions may be settled accordingly." (Emphasis added by us) 18. As aforesaid, according to the Exim Policy 1992-1997 read with Appendix XXXIII of the Handbook of Procedures, an EOU may sell 50% of its production in value terms into a DTA only on issuance of a removal authorization by the Development Commissioner. 19. In the instant case, admittedly at the time of sales of shrimps and shrimp seeds by the assessee in DTA, the Development Commissioner had not issued the requisite removal authorization. Therefore, in view of the dictum of this Court in SIV Industries (supra), with which we are in respectful agreement, and the afore-extracted Circular issued by the Board following the said decision, Excise Duty on such sales is char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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