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M/s. Madhu Silica Pvt. Limited, Shri Darshak R Shah Versus Commissioner of Central Excise & S.T., Bhavnagar

2015 (8) TMI 738 - CESTAT AHMEDABAD

100% EOU - Payment of duty on DTA clearance under Sr. no. 3 of the notification 23/2003 CE dated 31.3.2003 - Procurement of inputs from DTA whereas suppliers were availing deemed export benefits - appellant never stated that they were aware that any supplier of inputs was availing the benefit of Para 8.3 (a) and (b) of the FTP - Invocation of extended period of limitation - Held that:- In view of these amendments carried out in Notification No. 23/2003-CE rate of duty, as per Serial No. 2 of the .....

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turns and all intimations of receipt of inputs which are duly assessed by the jurisdictional Central Excise offices. The duty demand with respect to DTA clearance can not be recovered by enforcing B-17 bond executed by the main appellant, as exemption under Notification No. 23/2003-CE is claimed independently by the appellants and returns filed by the appellants were assessed and debonding allowed. - provisions of Section 11A of the Central Excise Act, 1944 will be applicable for demanding duty .....

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the arguments of the learned Advocate that none of the documents received by them from M/s. GHCL indicate anywhere that GHCL was availing the deemed export benefit - No copy of these DFIA licenses was furnished by the Revenue before the Bench and also there is no indication whether appellants were shown copies of these DFIA licenses during investigation to the fact that these licenses had endorsements of paragraph 8.3(a) and (b) of Foreign Trade Policy on the face of these DFIA licenses. In view .....

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al) And Mr. H.K. Thakur, Hon'ble Member (Technical),JJ. For the Appellant : Shri P.M. Dave & Shri Paritosh Gupta, Advocates For the Respondent : Shri J. Nagori, Authorised Representative ORDER Per : Mr. H.K. Thakur; These appeals have been filed by the appellants against OIO No. 01/BVR/Commissioner/2013 dated 08.01.2013 passed by Commissioner of Central Excise and Service Tax, Bhavnagar. Under this OIO dated 08.01.2013 Adjudicating authority has confirmed a demand of ₹ 4,86,65,605/ .....

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Shri P.M. Dave (Advocate), Shri Paritosh Gupta (Advocate) and Shri Kuntal Parikh (Advocate) appeared on behalf of the appellants. Shri P.M. Dave argued that main appellant was permitted by Development Commission, Kandla Special Economic Zone to work as a 100% EOU for the manufacture of Precipitated Silica. That main appellant has manufactured and exported the goods so manufactured to foreign countries and also a small quantity of such goods were allowed to be cleared and sold in Domestic Tariff .....

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to the effect that inputs received by a 100% EOU from other DTA units, who avail deemed exports benefit as per paragraph 8.3 (a) and (b) of the Foreign Trade Policy (FTP), were to be treated as imported goods. That by virtue of this amendment effective from 06.07.2007 even locally procured raw materials were to be treated as imported goods if suppliers have received deemed export benefits for such supply under Para 8.3 (a) and (b) of the FTP. That since the documents on which inputs were receive .....

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ffect from 12.04.2011 main appellant was allowed to exit and debonded, from 100% EOU by the office of Development Commission KASEZ, for working as a normal DTA manufacturer. That on 27.09.2011 officers of DGCEI started investigating the case. That none of the Directors of the main appellant ever stated that they were aware that any supplier of inputs was availing the benefit of Para 8.3 (a) and (b) of the FTP. That after detailed investigation a show cause notice dated 14.12.2011 was issued dema .....

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that suppliers were availing the benefit of deemed export Under Para 8.3 (a) and (b) of the FTP. That substitution of explanation with effect from 06.07.2007, about creation of a fiction in respect of deemed export, was not within the knowledge of the appellants and even Divisional Central Excise Officers were also not aware of the charges. That, assessments of raw material procurements as well as DTA clearances were finalized by field staff without raising any objection. That till date it is n .....

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to the corrigendum and contested that issuing of corrigendum is not on account of clerical or automatic error but has changed the entire basis of the show cause notice. That Adjudicating Authority has not appreciated the submissions made by the appellant and confirmed the demand and imposed penalties based on the corrigendum issued. Learned Advocate argued that DFIA License could also be allowed under paragraphs 8.4.2, 8.4.3, 8.4.4 (iv) and (v) etc. of the FTP and not only under Para 8.3 (a) and .....

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ntion to evade payment of duty on the part of the appellants as they had no way to know whether suppliers of raw material has availed Para 8.3 and (b) benefits. It was also argued that accordingly extended period of limitation can not be made applicable. Learned Advocate made the bench go through the B-17 bonds executed by the main appellant and argued that execution of general B-17 bond can not be considered to hold that time limit of Section 11A of the Central Excise Act 1944 is not applicable .....

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/2003-CE. He argued that ratio of case Law Bhilosa Industries Pvt. Limited vs. CCE Vapi [2015 (317) ELT 283 (Tri.-Ahmedabad), in Para-10 is squarely applicable to their case and extended period is not invokable, as appellants were filing all the required information/returns with the department. 2.2. That enhancement of duty demand by issuing a corrigendum is not legal because corrigendum issued is not only correction of duty by a typographical or clerical error, but it also changes the rates of .....

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hennai)]. (vi) Steel Authority Of India vs. CC, Visakhapatnam. [2007 (210) ELT 150 (Tri.-Bangalore)]. (vii) Kathe Steel Rolling Mills Pvt. Ltd vs. CCE and Cus, Aurangabad. - [2000 (115) ELT 145 (Tribunal)]. (viii) Kishore Hemani vs. CC Mumbai. - [2002 (148) ELT 88 (Tri.-Mumbai)]. 2.3. That on merits as well as time bar appellants have a strong case and that penalties on the appellants are also not attracted as there is no intention to evade duty. 3. Shri. J. Nagori, Additional Commission (AR) ap .....

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metical corrections without changing the basis of the show cause notice. He relied upon the following case laws in support of his arguments:- (i) Best and Co. vs. CC, New Delhi. - [2009 (239) ELT 294 (Tri.-Delhi)]. (ii) CCE, Cus and S.T. BBSR-I vs. Konark Industries. [2011 270) ELT 671 (Tri.-Kolkata)]. (iii)) Sara Services and Engineer Pvt. Limited vs. CCE, Meerut-I. - [2010 (254) ELT 486 (Tri.-Delhi)]. 3.2 On the issue of time barred nature of demand, it was argued by the learned Authorised Rep .....

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) CCE, Chennai vs. Peter & Miller Packers [2015-TIOL-652-HC-MAD-CX] 3.3 It was also the case of the learned AR that no time limit is applicable for demanding duty from a 100% EOU who has executed a general B-17 bond. He relied upon the case law of Endress+Hauser Flowtec (I) Pvt. Limited vs. CCE Aurangabad [2009 (237) ELT 598 (Tri. Mumbai)] and made the Bench go through Para 39 of this case law. 4. Heard both sides and perused the case records. Following issues are mainly required to be addre .....

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resent proceedings? (iv) Whether appellants agitated the issue on merits before the Adjudicating authority? (v) Whether penalties are imposable upon the appellants in these proceedings? 5. So far as issue mentioned at Para 4(i) above is concerned the main show cause notice dated 14.12.2011 was issued demanding duty of ₹ 1,33,22,958/- as duty payable according to Serial No. 2 of table to Notification No. 23/2003-CE. Provisions contained in Serial No.2 were amended periodically under Notific .....

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2 of the Table of the said exemption Notification No. 23/2003-Central Excise dated 31st March, 2003, the rate of Basic Customs Duty was reduced by 75% from 01.03.2006 to 28.02.2008 and by 50% with effect from 01.3.2008 and whereas other duties are leviable at full tariff rate on DTA sale of finished goods by a 100% EOU. Thus, M/s. MSPL is liable to pay Basic Customs duty at the rate of 2.5% up to 28.02.2008 and subsequently, w.e.f. 01.3.2008, they were liable to pay Basic Customs Duty @ 5% along .....

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ion in the original show cause notice the words instead of paying Central Excise duty leviable under Section 3 of the Central Excise Act, as per Serial No. 2 of the said Notification shall be substituted. However, in Para 2(d) of the corrigendum dated 18.6.2012 the words alongwith other duties at full tariff rate on DTA sale of their finished goods is also added. These words have added altogether new parameter by the investigation through the corrigendum dated 18.6.2012 which was not the subject .....

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out from the original show cause notice dated 14.12.2011. We are accordingly of the view that corrigendum dated 18.6.2012 is also changing the very basis of duty demand originally proposed in show cause notice dated 10.12.2011. It is thus not correct on the part of the Adjudicating authority, as held in Para 55 of OIO dated 08.1.2013, that no fresh ground is taken in the corrigendum. 6. Regarding issue at Para 4(ii) above, Revenue is of the argument that when a general B-17 bond has been execute .....

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is also observed that the same Bench later in the case of Sterlite Optical Technologies Limited vs. CCE, Aurangabad [2011 (270) ELT 266 (Tri. Mum.)], after considering Endress+Hauser Flowtec (I) Pvt. Limited vs. CCE, Aurangabad (supra) earlier decided by the same Bench, gave an opinion that Section 28 of the Customs Act, 1962 is the only provision to demand duty if the conditions of a notification are not fulfilled. Still a later case law of CESTAT Mumbai in the case of CCE, Pune vs. Emcure Phar .....

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ment Commissioner as early as in 2004 itself. Therefore, the respondent cannot be, said to have withheld any information from the department. The respondent s plea that they were entitled for the benefit of exemption under Notification 23/2003 under the belief that they were entitled for benefit of such Notification cannot be said to be a mis-declaration as held by the Hon ble Apex Court in Northern Plastics Ltd. v. Collector of Customs & Central Excise - AIR 1998 SC 2371 = 1998 (101) E.L.T. .....

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B-17 bonds before the department, the same logic would apply in respect of 100% EOUs as well. Therefore, the argument that merely because the respondent has executed a B-17 bond they would fall outside the purview of Section 11A is illogical and irrational. One cannot interpret the law in such a way so as to make the provisions of law redundant. 6.1 It is also observed from the language of bond B-17 executed by main appellant on 30.6.2004, that the same is mainly with respect to inputs and machi .....

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or manufacture of goods. A bond is executed by a person binding him to pay duty on certain goods which are being allowed duty free or partially exempted i.e. binding him to pay duty forgone at the time of receipt of goods. The enforcement of B-17 bond directly under Section 142(1) of the Customs Act, 1962 will be applicable only to the goods procured duty free because a 100% EOU may take more than 5 years from the date of import/ procurement to fulfil its export promotion. No doubt a Clause in P .....

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article under Section 3 of Central Excise Act, 1944 and duty of Customs & Central Excise leviable on the Raw materials/ Component part used in the manufacture of such articles as are not allowed to be sold in India in accordance with the provisions of Exim Policy. No condition so specified in this regard by DGFT has been brought to our notice. As no duty is foregone even Notification No. 23/2003-CE dated 31.3.2003, as amended, does not require execution of a bond for DTA clearances by the a .....

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e assessed and debonding allowed. Accordingly, we hold that provisions of Section 11A of the Central Excise Act, 1944 will be applicable for demanding duty from the main appellant in case conditions of Notification No. 23/2003-CE are not fulfilled. 7. Having held that provisions of Section 11A will be applicable in these proceedings it has to be decided whether extended period is invokable as per issue framed at Para 4(iii) above. Adjudicating authority has upheld invocation of extended period o .....

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edge that GHCL was availing the benefit of Para 8.3(a) and (b) of the FTP. It is only after being explained by the investigation that they stated that GHCL was availing the benefit of Para 8.3(a) and (b). However, there is a force in the arguments of the learned Advocate that none of the documents received by them from M/s. GHCL indicate anywhere that GHCL was availing the deemed export benefit under Para 8.3(a) and (b). It is seen from one such invoice No. 0004806 dated 21.5.2009 that following .....

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goods alongwith copies of the invoices. If field formation can not presume that supplier of goods was taking benefit under Para 8.3(a) and (b) of FTP then appellants also can not presume of such benefits being availed by the supplier. There is no evidence on record that appellants were aware of GHCL availing deemed export benefit under Para 8.3(a) and (b) of FTP. Revenue is not able to bring any evidence on record that GHCL has availed the benefit of Para 8.3(a) and (b) of the FTP. It is observe .....

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of paragraph 8.3(a) and (b) of Foreign Trade Policy on the face of these DFIA licenses. In view of the above, extended period of five years can not be invoked against the main appellant under proviso to Section 11A of the Central Excise Act, 1944 as there is no evidence of prior knowledge and suppression with intention to evade duty on the part of the appellants. 8. Regarding issue at Para 4(iv) above, learned AR argued that on merits appellants did not agitate the issue before the adjudicating .....

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inspection of some of these invoices does not indicate that supplier availing deemed export benefit of paras 8.3(a) and (b) of FTP. Paras 19.1 and 19.2 of OIO dated 08.1.2013, contained in reply of the appellant to show cause notice are relevant and reproduced below:- 19.1 They further stated that much emphasis was laid by the Revenue on the invoices of M/s. GHCL, but even invoices of this raw material supplier also did not clearly show that they had claimed or availed deemed export benefits und .....

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supplier would mean that they had availed deemed export benefits under paragraph 8.3 (a) & (b) of the FTP for such supplies and therefore there was o knowledge or information on their part about any such benefits of deemed export having been availed by any raw materials suppliers, and it is also a matter of fact that any of these suppliers had actually not availed any such benefits as was clarified by two raw material suppliers interrogated by the investigating officers in this case. 19.2 Th .....

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on DTA clearances at the rate prescribed underSI.No.2 of the above Notification because they had used raw materials procured in the above manner for manufacture of the finished goods cleared in DTA, and the Revenue has also not established that they had deliberately suppressed certain relevant facts though they knew about the same and that therefore they were guilty of deliberate suppression of facts with an intent to evade payment of Central excise duty on DTA clearances. The larger period of l .....

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