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2015 (8) TMI 299 - CESTAT NEW DELHI

2015 (8) TMI 299 - CESTAT NEW DELHI - TMI - 100% EOU - debonding - DTA sales made by the appellant against advance DTA permission - Concessional rate of duty under Notification No. 23/2003-CE (Sl. No. 2) - Invocation of extended period of limitation - Held that:- Since, the exemption Notification No. 23/2003-CE in terms of its condition, provides concessional rate of duty only to the goods cleared into domestic tariff area in accordance with sub-para (a), (d), (e) or (g) of para 6.8 of the Forei .....

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(b) of the notification, according to which the total value of the goods cleared into DTA under sub-para (a), (d), (e) and (g) of para 6.8 does not exceed 50% of the FOB value of exports made during the financial year.

Letter from Development Commissioner permitting advance DTA clearances by the appellant is also mis-leading as while it refers to the permission being granted in terms of para (g) of Appendix 14 1H of Handbook of Procedures, which pertains to advance DTA clearances, it .....

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appellant is not able to fulfill the Condition No.II attached to the Notification No.23/03-CE. Therefore, claiming the benefit thereof does not arise. This fact was not brought in the knowledge of the Department by the assessee by availing the benefit of the said notification. In these terms, the lower authorities have rightly invoked the extended period of limitation. - Decided against assessee. - Excise Appeal No.2245/2011-EX(DB) - Final Order No.52351/2015 - Dated:- 27-7-2015 - Shri Ashok Jin .....

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from the Development Commissioner vide his letter dated 30th June 2006 for advance DTA sales which were to be adjusted within two years against their DTA entitlement. The value of advance DTA sales allowed was ₹ 100 lakhs. This advance DTA sale permission was initially valid upto 12th June 2007 and the same was extended upto 17/10/07. The appellant commenced manufacturing operations around July 2006 and in addition to exports also made DTA clearances against their advance DTA sales permiss .....

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iff which was cleared by availing the concessional rate of duty under Notification No. 23/2003-CE. The Department was of the view that concessional rate under Notification No. 23/2003-CE would not be applicable in respect of the DTA sales made by the appellant against advance DTA permission for the following reasons :- (i) in terms of the conditions prescribed for the concessional rate in the Notification No. 23/2003-CE, the concessional rate would be applicable only in respect of the goods clea .....

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ot covered by the Notification. (ii) For the benefit of concessional rate under Notification No. 23/2003-CE the goods cleared into DTA (other than waste, scrap or remnants) are similar to the goods exported. In this case while the DTA clearances have been made of the O-rings, the goods exported during the period of dispute were mainly striker bumpers and nut seals which were totally different item ; (iii) the appellant had failed to achieve net positive foreign exchange earning during 2006-2007 .....

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ngs made into DTA during the period from October 2006 to October 2007 ; and (b) imposition of penalty on the appellant under Section 11AC of Central Excise Act. 1.3 The above show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 19/4/2010 by which he confirmed the duty demand as made in the show cause notice along with interest and imposed equal amount of penalty on them under Section 11AC of Central Excise Act. While confirming the duty demand and denying .....

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he period during which the advances DTA clearances have been made, was negative while for DTA clearances at concessional rate of duty, the positive NFE should have been achieved. Beside this, he also observed that the product being cleared into DTA and the product exported are not similar and, therefore, this condition of the Notification is also not satisfied. 1.4 On appeal being filed to the Commissioner (Appeals) against the above order of the Additional Commissioner, the Commissioner (Appeal .....

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icy, that the Department had been duly informed about DTA clearances being made against the advance DTA sale permission granted by the Development Commissioner, that even the advance DTA clearances made against the permission given in terms of para (g) of Appendix 14-1H of the Handbook of Procedures 2004-2009 are eligible for the concessional rate of duty under Notification No. 23/2003-CE, that positive NFE had been achieved by the time of debonding in 2009 and it is not necessary that during th .....

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ct, that the condition in the Notification that the goods cleared into DTA must be similar to the goods exported is not applicable when the DTA clearances are made against advance DTA clearance permission under para 6.8 (k) of the Foreign Trade Policy, that in any case the duty demand is time barred, as all the relevant facts had been disclosed by the appellant to the department and, hence, extended period under proviso 11A (1) is not applicable, that for the same reason, penalty on the appellan .....

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tion No. 23/2003-CE is available in respect of DTA clearances, in as much as neither the DTA clearances have been made in terms of sub-para (a), (d), (e) and (g) of para 6.8 of the Foreign Trade Policy nor the goods sold into DTA are similar to the goods exported nor during the period of DTA sales i.e. during the period October 2006 to October 2007, the appellant had achieved the positive net Foreign Exchange earning. He also pleaded that the appellant have suppressed the relevant facts from the .....

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ty payable on the DTA clearances made by a 100% EOU is aggregate duties of Customs chargeable on the import of like goods into India. Notification No. 23/2003-CE (Sl. No. 2) of the Table to the Notification prescribes a concessional rate of duty in respect of DTA clearances made by a 100% EOU, which is subject to certain conditions, as mentioned in this notification. The conditions subject to which the concessional rate of duty is applicable are as under :- (I) The goods are cleared into domesti .....

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period of such clearances in terms of Foreign Trade Policy ; (b) the total value of such goods being cleared under sub-paragraph (a), (d), (e) or (g) of para 6.8 of the Foreign Trade Policy into domestic tariff area from the units does not exceed 50% of the FOB value of exports made during the year [starting from 1st April of the year and ending with 31st March of the next year] by the said unit ; and (c) the balance of production of the goods which are similar to such goods under clearance into .....

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ports made by the unit during the year (starting from 1st April of the year and ending with 31st March of the next year) shall be allowed only when the unit has achieved net foreign exchange earning. 7. It is well settled by a series of judgment by the Apex Court in the cases of Eagle Flask Industries Ltd. vs. CCE reported in (2004) 7 SCC 377 and State of Jharkhand vs. Ambay Cements reported in (2005) 1 SCC 368, that the exemption notifications have to be strictly construed and if duty exemption .....

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goods up to 50% of FOB value of exports subject to fulfilment of positive NFE on payment of concessional duties. Within the entitlement of DTA sale, the unit may sell in DTA its products similar to the goods, which are exported or expected to be exported from the units. No DTA sale at concessional duty shall be permissible in respect of motor cars, alcoholic liquors, books, tea (except instant tea), pepper and pepper products, marble and such other items as may be notified from time to time. Suc .....

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atory requirement of registration of pharmaceutical products (including bulk drugs). (b) For services, including software units, sale in the DTA in any mode, including on line data communication shall also be permissible up to 50% of FOB value of exports and/or 50% of foreign exchange earned, where payment of such services is received in foreign exchange. (c) Gems and jewellery units may sell up to 10% of FOB value of exports of the preceding year in DTA subject to fulfilment of positive NFE. In .....

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tlement. Sale of rejects up to 5% of FOB value of exports shall not be subject to achievement of NFE. (e) Scrap/waste/remnants arising out of production process or in connection therewith may be sold in the DTA as per the Standard Input-Output norms modified under the Duty Exemption Scheme on payment of concessional duties as applicable within the overall ceiling of 50% of FOB value of exports. Such sales shall not, however, be subject to achievement of positive NFE. In respect of items not cove .....

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ies. (g) By-products included in the LOP may also be sold in the DTA subject to achievement of positive NFE on payment of applicable duties within the overall entitlement of paragraph 6.8 (a). Sale of by-products by units not entitled to DTA sales or beyond the entitlements of paragraph 6.8 (a) shall also be permissible on payment of full duties. (h) EOU/EHTP/STP/BTP units may sell finished products, except pepper and pepper products and marble which are freely importable under the Policy in the .....

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, advance DTA sale will be allowed not exceeding 50% of its estimated export for the first year except the pharmaceutical units, where this will be based on its estimated exports in the first two years. 9. From the perusal of the above para, it will be seen that only sub-para (k) of the para 6.8 provides for the permission for advance DTA sales in case of new units. The sub-para (a), (d), (e) and (g) of para 6.8 are about normal DTA clearances of the goods being manufactured by the unit or the D .....

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A against advance DTA sales permission granted under para 6.8 (k) are not covered by this notification. The fact that the advance DTA clearances in terms of para 6.8 (k) of the Foreign Trade Policy are not covered by this exemption notification is also clear from the Condition (II) (b) of the notification, according to which the total value of the goods cleared into DTA under sub-para (a), (d), (e) and (g) of para 6.8 does not exceed 50% of the FOB value of exports made during the financial year .....

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