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2015 (8) TMI 738 - CESTAT AHMEDABAD

2015 (8) TMI 738 - CESTAT AHMEDABAD - 2016 (344) E.L.T. 1072 (Tri. - Ahmd.) - 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 carri .....

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f the Central Excise Act, 1944. Main appellant has been filing duty payment returns 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 Sect .....

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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 - 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( .....

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1187-11188/2015 - Dated:- 11-8-2015 - Mr. P.K. Das, Hon'ble Member (Judicial) 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 .....

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Central Excise Rules, against which Appeal No. E/10426/2013 has been filed. 2. 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 .....

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7-CE dated 06.07.2007 an explanation was added to Notification No. 23/2003-CE 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 .....

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) and (b) of FTP for the entire period January 2004 to April 2001. That with effect 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 aft .....

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17.02.2012 to the show cause notice that appellants were not aware of the fact 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 .....

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use Notice dated 14.12.2011. That on 23.07.2012 appellant filed further reply 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, .....

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g any indication of Para 8.3 (a) and (b) of FTP then there can not be any intention 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 t .....

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orrectly availing the benefit of Serial No. 3 of exemption Notification No. 23/2003-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 o .....

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. (v) Castrol India Limited vs. CCE Bangalore. - [2001 (135) ELT 1249 (Tri.- Chennai)]. (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 .....

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ble to Notification No. 23/2003-CE during the demand period and was only arithmetical 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 issu .....

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aswati Steel Industries vs. CCE, Rajkot [2002 (148) ELT 1250 (Tri. Del.)] (iii) 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 .....

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) above is negative whether extended period of 5 years can be invoked in the present 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-C .....

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e corrigendum as follow:- 2(d) In view of the above amendments, as per S. No. 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 subsequ .....

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Section 3 of the Central Excise Act, as per Serial No. 2 of the said Notification 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 i .....

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shed goods, in Para- 2(d) of corrigendum 18.6.2012, is a new point not coming 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) ab .....

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e raised against a 100% EOU by enforcing B-17 bond without any time limit. It 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. St .....

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sales to be effected by them in terms of the permission granted by the Development 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. Co .....

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TA. If Section 11A is applicable in respect of units in DTA who have executed 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 ap .....

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dutiable goods, imported/sourced indigenously by appellant from time to time for 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 .....

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of the Central Excise Act, 1944 and shall pay duty of excise leviable on such 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 .....

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laimed independently by the appellants and returns filed by the appellants were 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 .....

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Shri Darshak R. Shah that none of them ever stated that they were having knowledge 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 .....

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from 06.7.2007. Main appellant was filing due intimations of receipt of these 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 .....

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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 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 argu .....

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d (b) as per endorsement made by GHCL on invoices. As already observed actual 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 di .....

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wever not aware that DFIA file number shown on the invoices of a raw material 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 mater .....

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Revenue has also not established that they were required to pay excise duties 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 .....

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