TMI Blog2010 (4) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... R.M.S. Khandeparkar, President and Shri Rakesh Kumar, Member (T) REPRESENTED BY : S/Shri J.P. Kaushik Advocate and J.M. Sharma Consultant, for the Appellant. Shri K.P. Singh, SDR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. - These three appeals have been filed against the Commissioner's order dated 18-8-2005 which itself was passed in pursuance of the Final Order Nos. 1060-1062/04-NBA 29-9-04 by the CESTAT [2005 (187) E.L.T. 474 (Tribunal)]. In fact, the matter is before the Tribunal for the third time. 2. Heard both sides. 3. The relevant facts, in brief, are as follows : (a) M/s. EON Polymers Ltd., E-1191, Phase IV Industrial Estate, Bhiwadi is a 100% EOU which has been granted LOP for the manufacture of PET bottles/jars/preforms falling under Chapter Heading 39.26. They were also licensed as a private warehouse under Section 58 of the Customs Act w.e.f. 8-10-1996 and under Rule 174 of Central Excise Rules, 1944 w.e.f. 20-5-97. (b) The appellant company vide their letter dated 14-7-97 informed the Assistant Commissioner that they wanted to operate a DTA unit from a portion of the same premises (where they were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the order dated 20-3-2001 of the Tribunal with the direction for de novo consideration. The Commissioner passed an order dated 15-7-2003 in pursuance of the order dated 20-3-2001 of the Tribunal which, on appeal, was again set aside by order dated 29-9-04 of the CESTAT with direction for de novo consideration. The impugned order dated 18-8-2005 has been passed in pursuance of the second remand order dated 29-09-04. As a result, the matter is before the Tribunal for the third time. (h) The Commissioner vide impugned order dated 18-8-2005 confirmed a demand of Rs. 29,09,335/- under Section 11A; ordered recovery of interest under Section 11AB of the Act; imposed penalty of equal amount on the appellant company, under Section 11AC of the Act, but refrained from imposing penalty on the appellant company under Rule 173Q and 209 of the Rules; imposed penalties of Rs. 5 lakhs on Sanjeev Malik and Rs. 1 lakh on Rajeev Malik under Rule 209A of the Rules. He also confiscated the unaccounted bottles and resin. He also revoked C.Ex. registration of the domestic unit. 4. The learned Advocate for the appellants made the following submissions : (a) The appellant company is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lised from the customers in respect of clearance without payment of duty must be treated as cum duty price in view of Hon'ble Supreme Court's judgments in cases of - (i) Collector v. Shri Chakra Tyres Ltd. reported in 2002 (142) E.LT. - A79 (S.C.) and (ii) CCE, Delhi v. Maruti Udyog Ltd. reported in 2002 (141) E.L.T. 3 (S.C.), and assessable value must be determined on this basis. (f) If duty is charged on the goods alleged to have been manufactured in EOU, but out of the inputs procured in the name of DTA unit and cleared into DTA, the Appellant would be eligible for Modvat credit of duty on the inputs. 5. Learned SDR made the following submissions : (a) The EXIM policy or the Notification do not provide for situations of clandestine removal. (b) The appellant company has not claimed and availed the benefit of Notification 8/1997-C.E., dated 1-3-97. The words used in the notification "allowed to be sold" should be read as allowed as per the EXIM policy. 6. We have carefully considered the submissions from both sides. The investigation in this case confirmed that the appellant was having a 100% EOU; the appellant procured goods duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e realised to be treated as cum-duty value or not. (d) Whether interest under 11AB can be confirmed in the present case. (e) Whether the registration granted under Rule 174 can be revoked for reasons specified under sub-rule (11) of the said Rule. (f) Whether penalties are to be sustained on the appellants and if so, to what extent. 8. It is appropriate to note one of the fundamental differences in respect of clearances by a 100% EOU and DTA units. There is no restriction on any normal DTA units on the quantum of their clearances either for domestic consumption or for export. On the other hand, the 100% EOU is basically required to export its production and in view of such obligation they are extended many benefits. There are therefore quantitative restrictions on clearances they can effect to the domestic market. They are permitted by the Development Commissioner, only to a limited extent clearances to the DTA depending upon their export performance. Any clearances made to DTA by a 100% EOU, against the terms of the permission of the Development Commissioner are offending in nature for which the Development Commissioner can take action for violation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that the view taken to the contra in Kuntal Granites (P) Ltd. is not good law. The reference is answered as above and appeals are sent back to the Regular Bench for hearing on other issues." The implication of the above decision is that the rate of duty applicable to goods cleared from any 100% EOU is the same irrespective of whether the clearances are covered by the permission by the Development Commissioner or not and the same is as per the proviso to Section 3(1) of the Central Excise Act, 1944. However, as discussed above, any exemption notification prescribing exemption to clearances up to the limit prescribed by the Development Commissioner has to be strictly allowed only up to the limit prescribed. It has also been submitted that the rate of duty even in respect of goods clandestinely removed shall be the effective rate after applying the exemption Notification as may be applicable and in this regard the decision of the Tribunal in the case of CCE, Jaipur-II v. Modern Polyster Yarn reported in 2002 (149) E.L.T. 377 (Tri. - Del.) has been cited wherein the Tribunal, relying on its earlier judgment in case of Euro Cotspin Ltd. v. CCE, Chandigarh reported in 2001 (127) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A to 100H of the Central Excise Rules, 1944 and as per the provisions of Rule 100H(2), the provisions of Rule 57A 57Q, (providing for input duty Modvat credit and; capital goods duty Modvat credit) were not applicable to the excisable goods produced or manufactured by a 100% EOU. Therefore the Appellant's claim for Modvat credit has to be rejected. 9. Next comes the question as to whether while quantifying the duty demand the price realised by the Appellant from the customers is to be treated as cum duty price and duty is to be calculated on the assessable value determined on this basis. The Appellant in support of this plea have relied upon Hon'ble Supreme Court's judgments in cases of Collector v. Shri Chakra Tyres Ltd. (supra) and CCE, Delhi v. Maruti Udyog Ltd. (supra). 9.1 Here are three types of clearances without payment of duty in respect of which duty has been demanded - (a) Clandestine clearances by the EOU without payment of duty and without issue of invoices; (b) Clearances by the EOU without payment of duty under parallel invoices. (c) Clearances made under the invoice of DTA unit at nil rate of duty by fraudulently availing the exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t interest under Section 11AB of the Act, is not leviable in view of the provisions of sub-section (2) which reads as under : "The provisions of sub-section (1) shall not apply to cases where the duty becomes payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President." The above decision is also sought to be supported by the decisions of CESTAT in cases of Southern Power Equipment (P) Ltd. [2009 (91) RLT 245] and Ajanta Tubes Ltd. - 2006 (75) RLT 475. 10.1 Section 11AB was introduced with effect from 28-9-96 providing for recovery of interest on duty which was not paid, or short paid or erroneously refunded, "from the first day of the month succeeding the month in which the duty ought to have been paid". However, this provision was limited to cases of demand arising due to "by reason of fraud, collusion, or any wilful mis-statement or suppression facts with intent to evade payment of duty". The amendment with effect from 11-5-2001 enlarged the scope of coverage of cases relating to recovery of interest to all cases of demand "from the first day of the month succeeding the month in which the duty ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts payable after granting reasonable opportunity of hearing. 14. The Commissioner vide impugned order imposed penalty of Rs. 5 lakhs on Shri Sanjeev Malik, a Director and Rs. 1 lakh on Shri Rajeev Malik, M.D. under Rule 209A of the Rules. Shri Sanjeev Malik has been admittedly looking after the entire activities of the company. Shri Rajeev Malik, M.D., claims that he was visiting the factory once in a blue moon. The Commissioner has given his detailed findings about the role of both of them and the justification for imposition of penalty. The modus operandi of evasion involved manufacture in the 100% EOU and clearing part of the production as if manufactured in the DTA unit and systematic manipulation of records relating to procurement of raw materials, production and clearances. The clearances have taken place using parallel invoices and in some cases with out raising any invoices. Considering the role and responsibility of Directors of any company, in the given facts and circumstances of case, the claim of ignorance by the M.D. or other director is not acceptable. Therefore, we are in agreement with the findings of the Commissioner on the need for imposition of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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