TMI Blog2017 (10) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... r cases, the levy is on the goods manufactured and removed. Held that: - The words 'allowed to be sold' in Clause (ii) of Proviso to Section 3(1) of the Act are relevant in this regard. The petitioner paid appropriate duty on the DTA sales on the goods allowed to be sold and consequently, there cannot be a further levy. Therefore, if the show cause notice is allowed to be proceeded further, it would go contrary to the charging provision namely Section 3 of the Act as applicable to 100% EOU. Scope of SCN - the impugned SCN is sought to be challenged on technical grounds without meeting the allegation as pointed out in the impugned SCN - Held that: - On a reading of the SCN dated 24.4.2002, this Court is of the view that such exercise cannot be done, as the legal position or for that matter the effect of Exemption Notification cannot be applied in the abstract, but are required to be applied to the facts and circumstances of each case. Therefore, however strong the case of the petitioner would be on legal grounds, while examining the applicability of the same, it is essential and necessary to go into the factual matrix. The allegation against the petitioner being one of irre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished products produced in a 100% EOU, when sold in India as the DTA sales, the duty amount payable is 50% of the customs duty including other duties like SCD and ACD respectively. The petitioner is stated to have paid a total sum of ₹ 74,35,252/- in terms of Notification No.2/95. The petitioner would state that they are not liable to pay SCD and ACD, which amount to ₹ 41,58,997/-. It is the claim of the petitioner that the said amount is liable to be refunded to them. While so, the respondent issued a show cause notice dated 24.4.2002 alleging irregularity in the availment of concession under the DTA sales furnishing inflated export sales. The petitioner did not submit their objections/reply to the said show cause notice, but has approached this Court seeking for the issuance of a Writ of Prohibition to prohibit the respondent from proceeding with the show cause notice dated 24.4.2002. 5. Mr.K.Jayachandran, learned counsel for the petitioner submits that the impugned notice is merely on speculation, premises and assumptions and wholly without jurisdiction. It is further submitted that in terms of Rule 173A(2) of the Rules, nothing contained in Chapter VII-A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Authority over the decision of the Development Commissioner. The Central Board of Excise and Customs (CBEC), New Delhi, in their circular No.618/9/2002 - ex - dated 13.2.2002, clarified that prior to 11.5.2001, the clearance from the EOU, if not allowed to be sold in India, shall continue to be chargeable to duty under Section 3(1) of the Act. According to him, in the present case, if the permission granted by the Development Commissioner, MEPZ, is not valid and even if the benefit of Notification No.2/95 is not applicable, then, as per the Board's Circular, the respondent can levy only central excise duty. Therefore, the levy and demand of 50% of the customs duty with ACD and SCD is contrary to the Board Circular. Similarly, the petitioner is entitled to get refund of 50% of the customs duty and ACD and SCD paid as per the said Notification. 9. It is further submitted that the goods were sold in the DTA market after payment of appropriate customs duty and that the Authorities have to treat the goods so sold in the DTA Unit as 'deemed export'. It is submitted that the Central Excise Authorities have knowledge of the value addition formula adopted by the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Prohibition, have been summarized. Essentially, the petitioner would contend that the impugned show cause notice cannot be allowed to be proceeded further and the difference of levy on goods manufactured in a case of 100% EOU and that of the levy of goods manufactured and cleared by any other unit is significant, as, in the case of 100% EOU, it is on the goods allowed to be cleared and sold in India whereas in other cases, the levy is on the goods manufactured and removed. 14. The words 'allowed to be sold' in Clause (ii) of Proviso to Section 3(1) of the Act are relevant in this regard. The petitioner paid appropriate duty on the DTA sales on the goods allowed to be sold and consequently, there cannot be a further levy. Therefore, if the show cause notice is allowed to be proceeded further, it would go contrary to the charging provision namely Section 3 of the Act as applicable to 100% EOU. 15. The petitioner places heavy reliance on the Exemption Notification namely Notification No.2/95-CE dated 04.1.1995 whereby the Central Government exempted all excisable goods specified in the Schedule to the Central Excise Tariff Act, 1985 and produced or manufactured in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consequently, the value addition achieved has been boosted to 30.6% as detailed in Annexure I to the show cause notice. It is further alleged that the petitioner thereby got permission from the MEPZ to clear 40% of value of production in the DTA at concessional rate of duty under Notification No.2/95 dated 04.1.1995. 20. Referring to the formula for calculating Net Foreign Exchange Profit (NFEP), it is stated that the formula is A - B/A X 100, in which, 'A' denotes FOB value of exports by the unit and 'B' is the sum total of imported inputs used and as per the guidelines given in Annexure-I of the Handbook of Procedures for Calculating NFEP, as per paragraph 9.29 of the EXIM Policy, it has been prescribed that while arriving at the value of 'B', whatever raw material consumables and spares are imported during the year are to be taken into account and it is apparent that whatever raw material in balance at the end of the previous year is added, while the raw material at the end of current year is deducted, it would give the amount of raw material consumed during the year. The raw material purchased as inter unit transfer was also included. 21. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SIV Industries Ltd., and the latest being Sarla Performance Fibers Ltd. One common feature in all these decisions is that the matter has travelled upto the Hon'ble Supreme Court after exhausting all the remedies available under the Act. In other words, the show cause notice was adjudicated upon and an Order-in-Original was passed, which was challenged before the Tribunal and against the decision of the Tribunal, as the matter pertains to valuation, an appeal was filed before the Hon'ble Supreme Court. Except in the case of Norton Intec Rubbers (P) Ltd., which is a decision of the learned Single Judge (as he then was) of this Court, all other decisions of the Hon'ble Supreme Court have been rendered after the respective assessees exhausted the hierarchy of remedies available under the Act. In such circumstances, it has to be seen as to whether the petitioner should be permitted to stay away from the proceedings and seek for a Writ of Prohibition. 25. In Mohd. Ghulam Ghouse, the Hon'ble Supreme Court, while considering the issue of maintainability of writ petitions under Article 226 of The Constitution of India against show cause notices, held that in large number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a factual issue, which has to be agitated by the petitioner before the Adjudicating Authority. Whether or not there has been inflation and whether the respondent was justified in arriving at the actual NFEP at 3.95% is correct or otherwise, has to be thrashed out before the Adjudicating Authority. After the factual scenario becomes clear, then only a situation arises for applying the legal principle. This Court would not have been wholly justified to examine the four decisions cited by the learned counsel for the petitioner as to their applicability or otherwise. However, having been convinced that the impugned show cause notice cannot be treated to be wholly without jurisdiction, this Court has refrained from undertaking such exercise, as it would prejudice the rights of the assessee. 29. In the case of Norton Intec Rubbers (P) Ltd., the writ petition was filed challenging a show cause notice and on going through the facts of the case, the Writ Court was satisfied that the petitioner therein had filed appropriate application before the appropriate Officer and the appropriate Officer allowed clearance of excisable goods after following due procedure and in view of this categor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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