TMI Blog2015 (4) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... tifying discharge of export obligation under the advance license. Similarly, the supplies made to M/s. Vitrag Impex in DTA against receipt of foreign exchange. The appellants sought for permission for sale in DTA from the Development Commissioner based on the purchase order placed on the appellant by M/s. Reza Overseas Metal Trading of UAE for delivery of goods to M/s. Vitrag Impex. It is important to note that the said sale was made on full payment of duty. No justification to raise demand of Central Excise duty on the goods supplied to the said Companies. So, the demand of Central Excise duty alongwith interest and confiscation of goods and imposition of redemption fine in respect of supply of materials to the said two parties are not sustainable. Demand of duty alongwith interest and imposition of penalty as well as confiscation and imposition of redemption fine on the raw materials and the finished goods except shortage of 5.867MTs of Zinc Scrap, on the assessee, are not sustainable. The learned Advocate had not seriously disputed the demand of duty on 5.867MTs Zinc Scrap. It is seen from the adjudication order that, it was admitted that the goods were cleared clandestinely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kishorbhai Purohit, Manager of M/s. Sai Flipped Coil Pvt. Limited (Appellant No.8) and Shri Anil Sohanlal Jain, Power of Attorney holder of M/s. Vitrag Impex (Appellant No.6). 3. A show cause notice dated 30.6.2006 was issued to the assessee proposing demand of Customs duty alongwith interest on 203.428 MT of imported duty free raw materials used in the manufacture of finished goods, which was diverted in the local market and demand of Central Excise duty alongwith interest on 31.537MT and 64.902MT of finished goods cleared to M/s. Sai Flipped Coil Pvt. Limited and M/s. Vitrag Impex, respectively without payment of duty. It has also proposed confiscation of goods and imposition of penalties on the assessee and other appellants. By the impugned order, the adjudicating authority passed the order as under:- (a) Confiscation of the raw materials weighing 203.428MTs imported duty free and utilised in finished goods removed clandestinely, and as the goods were not available for confiscation, imposed redemption fine of ₹ 15,80,000/-. It has confirmed the demand of Customs duty of ₹ 24,87,261/- alongwith interest on the said raw material and imposed penalty of equal amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Flipped Coil Pvt. Limited, Advance Licence holder and M/s. Vitrag Impex in DTA sales. It is contended that both the parties have admitted the receipt of the goods and the demand of Central Excise duty is not sustainable. It is further contended that according to the Department, the raw materials were used in the finished goods, which were diverted in the local market. As the demand of Central Excise duty were raised on the finished goods and therefore, demand of Customs duty on raw materials can not be sustained. He relied upon various decisions, as under:- (a) CCE vs. Sanjari Twisters 2009 (235) ELT 116 (b) Commissioner vs. Sanjari Twisters 2010 (255) ELT A15 (c) Vandevi Texturisers Pvt. Ltd vs. CCE 2007 (220) ELT 289 5 He also submits that the adjudicating authority merely proceeded on the basis of statements of the transporters. Appellant No. 6 and 8 had clarified their statements during cross examination. It is contended that the goods were received by the said parties and the advance license holder was granted EODC certifying discharge of export obligation under the advance license and duty can not be demanded. He relied upon the following decisions:- (a) CCE vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de at the behest of Shri Pratik Gandhi, partner of the assessee. The adjudicating authority also observed that the duty free raw materials procured by the assessee were not used for intended purposes. In fact, the finished goods manufactured out of imported duty free raw materials, were removed clandestinely without duty paying documents and in order to cover up the said illegal transactions, they have shown to have cleared the goods on deemed export basis or against the advance licenses. It is further noticed that in some cases, the duty free materials were diverted into local market without payment of duty. 9. As regards the clearances of goods to the quantity of 31.537MT of Aluminium ingots to M/s. Sai Flipped Coil Pvt. Limited, it is submitted by the appellant that they supplied the materials to M/s. Sai Flipped Coil Pvt. Limited, advance license holder, as per Para 4.1.11 of the Foreign Trade Policy, with the permission of Central Excise authorities. The relevant portion of the said Policy is reproduced below:- 4.1.11 Advance Release Orders An Advance Licence holder, holder of advance licence for annual requirement and holder of DFRC intending to source the inputs from i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected from EOU/EHTP/STP/BTP units to DTA will be counted for the purpose of fulfilment of positive NFE:- (a) . (b) Supplies effected in DTA against payment from the Exchange Earners Foreign Currency (EEFC) Account of the buyer in the DTA or against foreign Exchange remittance received from overseas. 10.1 The assessee by letter dated 15.3.2004, sought permission from the Development Commissioner, Kandla Special Economic Zone, Gandhidham to sale the finished goods in DTA under Para 6.9(b) of the Policy against foreign exchange remittance received from M/s. Reza Overseas Metal Trading. The assessee also enclosed the letter of the overseas buyer with the said letter. By letter dated 21.3.2004, the Deputy Commissioner, Kandla Special Economic Zone, Gandhidham permitted the assessee to sale the goods to M/s. Vitrag Impex, subject to the condition as contained therein. By letter dated 10.4.2004, M/s. Vitrag Impex confirmed receipt of materials from the assessee on behalf of M/s. Reza Overseas Metal Trading. I find from the records that the assessee paid the duty in respect of the invoices as mentioned in the impugned order. 10.2 It is seen from the adjudication order that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Satishbhai of M/s. Asia Metals was ordered for supply of Aluminium ingots and Aluminium scrap against advance license; they sent the copies of advance licenses, based on which they obtained permission from their jurisdictional Central Excise office and provided copy thereof to them; they had sent the original advance license with Release Advise issued from the ICD, Ahmedabad, where the licences were registered; based on which they sent them the goods as mentioned above; they also made entries of receipt in the respective statutory registers; they paid them the amount for the supply they received; the transportation charges were to be paid by them and they paid. In his statement dated 30.11.2005, it was further stated that they purchased raw materials for their factory from M/s. Asia Metals under four bills, details of which given in his statement dated 26.11.2005; they had not made any other transaction; they had purchased goods against the advance license hold by them and thereby claimed exemption from duty payment; as they understood they were permitted to procure goods from EOU and also under the advance license held by them. 11.2 Shri Anil Sohanlal Jain, Power of Attorney Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the raw material has been directed to some other destination, instead of being transported to the manufacturers factory/premises. (2) The payments were made through cheques/demand drafts. (3) Inputs in question have been used in the manufacture of final products which have been cleared on payment of duty. (4) The RT-12 returns have been assessed finally by the Range Officer, which contains all the documents including (the invoices under dispute) on the basis of which the Modvat credit has been availed and utilised. (5) The respondents had not played any role in the wrong mentioning of wrong vehicle numbers and the Modvat credit was passed rightly. The Adjudicating Authority vide its order dated 21.12.2004 held that the charges levelled in the show cause notice stands established against the respondents who in connivance with one another, defrauded the Government of its legitimate revenue and imposed the penalty on the respondents. Revenue filed appeal before the Honble Supreme Court against the aforesaid decision of the Honble Punjab Haryana High Court. The Honble Supreme Court dismissed the appeal filed by the Revenue as reported in 2011 (270) ELT A91( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vitrag Impex. It is important to note that the said sale was made on full payment of duty. In view of the above materials, I do not find any justification to raise demand of Central Excise duty on the goods supplied to the said Companies. So, the demand of Central Excise duty alongwith interest and confiscation of goods and imposition of redemption fine in respect of supply of materials to the said two parties are not sustainable. 14. The other issue in these appeals is the demand of duty on the raw materials under the Customs Act and confiscation of the said goods and imposition of redemption fine. I find force in the submissions of the learned Advocate on this issue. The adjudicating authority observed that the raw materials imported by the appellant have been utilised by them in the manufacture of finished goods and the said resultant products were diverted into the local market, shown to have been cleared to M/s. Vitrag Impex and M/s. Sai Flipped Coil Pvt. Limited. The adjudicating authority also confirmed demand of Central Excise duty on the finished goods under the Central Excise Act. The Tribunal in the case of Vandevi Texturisers Pvt. Limited vs. CCE Surat 2007 (220) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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