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TMI Blog2019 (2) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... e-bonding The appellant applied to the Deputy Commissioner of Central Excise, LTU ('DC-LTU') for de-bonding the Prill Unit EOU w.e.f. 01.10.2010. 28.09.2010 Advance License issued DGFT issued Advance License to the appellant for discharging custom duty on imported raw material at the time of de-bonding. 01.10.2010 Intimation of stock to the department The appellant submitted self-certified stock statement of raw material, capital goods, consumables, work-in-progress ('WIP') and finished goods lying in stock as on cut-off date 11.11.2010; 23.11.2010; 29.11.2010 Advance License issued DGFT issued Advance License to the appellant for discharging custom duty on imported raw material at the time of de-bonding. 23.12.2010 Completion of stock verification The DC-LTU intimated that the stock verification has been completed by central excise officers and the appellant was directed to discharge central excise and custom duty at applicable rates. 11.02.2011 Computation of Liability The appellant submitted the computation of liability to the DC-LTU and requested to confirm the proposed mode of payment of duties. 22.02.2011 Confirmation of mode of payment DC-LTU confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he duty & interest paid under protest during the course of investigation. 06.08.2015 Deficiency notice by department The department issued deficiency letter to the appellant with respect to the above refund claim. 20.10.2015 Reply to deficiency notice The appellant replied to the above queries of the department and submitted various documents to prove its claim. 28.10.2015 Re-credit sanctioned In the meantime, the Assistant Commissioner, LTU, Mumbai sanctioned the above re-credit claim of cenvat credit reversed of the appellant filed on 06.04.2015. 06.01.2016 SCN issued for refund application The department issued the show cause notice calling upon the appellant to show as to why their refund claim should not be rejected. The said show cause notice once again alleged that the mode of payment of duties by the appellant at the time of de-bonding was incorrect. 05.05.2016 Reply filed The appellant filed a detailed reply to the above show cause notice. 11.05.2017 O-I-O partly rejected the claim of refund The order-in-original issued by the Deputy Commissioner, LTU, Mumbai partly rejected the refund claim of the appellant. --------------- Appeal to CCE(A) The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonding order. _______ DC-LTU objected mode of payment of duty The Deputy Commissioner-LTU, long after the entire process was over, disputed the mode of payment of excise and customs duty by the appellant and directed the appellant to discharge its duty liability in cash. Further, the Deputy Commissioner-LTU also directed to reverse cenvat credit availed on CVD and SAD paid on raw material and capital goods (indigenous as well as importer). February, 2013 to March, 2013 Payment of duty in cash and reversal of credit under protest The appellant again discharged the above liability in cash along with interest and reversed cenvat credit CVD & SAD that was taken on the original duty payment. The said payment and reversal were made 'under protest'. 01.11.2013 SCN issued on the basis of above investigation The department issued show cause notice to the appellant, alleging that the payment method adopted by the appellant for payment of duty at the time of de-bonding is incorrect and the cenvat credit availed on CVD and SAD is inadmissible. 20.12.2013 RUD received The appellant received the relied upon documents of the above show cause notice. 22.01.2014 Reply filed The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal filed by whom Appeal filed against Order Number along with date Unit 1. Revenue Order-in-Original 186/Commr/WLH/LTU-M/CX/2014 dated 03.09.2014 Prill 188/Commr/WLH/LTU-M/CX/2014 dated 03.09.2014 Oral 2. Assessee Order-in-Appeal BHO-EXCUS-001-APP-510-17-18 dated 30.11.2017 Prill BHO-EXCUS-001-APP-505-17-18 dated 30.11.2017 Oral 5. Personal hearing was held on 14.08.2018, Mr. Bharat Raichandani, Ld. Advocate, appeared on behalf of the appellant/respondent (M/s Lupin) and reiterated the submission made in their appeal memorandum. 6. We have carefully gone through the facts of the case on record, grounds of appeal in the Appeal Memorandum and submissions made by the respective parties. APPEAL FILED BY THE REVENUE 7. We find that the Commissioner has passed a detailed and cogent order. The Commissioner has given finding on each and every point and decided the show cause notice judiciously. 8. The grounds of appeal do not dispute the factual position. The grounds of appeal are beyond the scope of the show cause notice. The grounds of appeal are without any merit. Hence, the appeals filed by the Revenue are liable to be rejected and consequential refund should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above submission is without any merit for the reasons as follows: 12. First, the said ground is not a ground on limitation. The said ground does not challenge the finding of the Commissioner, reproduced above, on limitation. It is not even prayed that the demand is not time barred. The said ground of appeal does not urge that the dropping of the demand by not invoking the extended period of limitation under proviso to section 11A of the Central Excise Act or section 28 of the Customs Act is not correct. Hence, the reliance placed on the said ground is incorrect. 13. Second, in any event, the said ground of appeal is beyond the entire proceedings. The same is being raised for the first time during hearing before this Tribunal. This is clearly impermissible. The Revenue cannot make out a new case at this stage 14. Third, in any event, if the allegation that the advance license was obtained fraudulently is correct, then the Licensing authority (DGFT) would have taken action against the Respondent. No such action has been taken by the DGFT. There is no such proposal. The Revenue cannot go beyond the license and propose to deny benefit of exemption and demand duty. The Hon'ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty as alleged in the show cause notice, at best, be said to be a case of incorrect interpretation of law. However, no mala fide intent or collusion can be attributable on the assessee so as to invoke larger period of limitation under Section 28 (4) of the Customs Act. Further, the Respondent has followed the above method/mode of payment for de-bonding of another unit (Prill Unit), where no objection was raised by the department. Hence, the Respondent proceeded on the same basis. Moreover, all the relevant facts have been appropriately disclosed to the Department vide various letters and periodical returns. The Respondent communicated their intention for de-bonding from EOU vide letter dated March 9, 2011. Before commencing the de-bonding of the Oral EOU, the Respondent had obtained final de-bonding orders of Pril EOU. At the time of de-bonding of the Pril EOU, the Respondent discharged the applicable duties. As the unit had submitted their letter dated 11.02.2011 showing the mode of payments, department was already aware of the duty positions adopted by the Respondent. Further, pursuant to discharge of the applicable duties, the Respondent intimated the Customs and Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise. Similarly, when the EOU converts to DTA the duty payable on finished goods and goods procured indigenously is central excise duty. This view has been taken by Larger Bench of this Tribunal in Vikram Ispat vs. CCE 2000 (120) ELT 800 (Tri. - LB) wherein the issue was primarily the availability of credit of tax paid on input received from an EOU and determination of the nature of duty on clearance of finished goods produced or manufactured within an EOU. The Larger Bench has, inter alia, held that clearance of goods by an EOU to any place in India is not 'import' as defined under section 2(23) of the Customs Act, 1962. 22. Third, the taxable event contemplated under the Customs Act for the purpose of levy of customs duty is bringing goods into the territorial borders of India from place outside India. However, in the present case EOU is situated in the territory of India. The goods in dispute are procured by the respondent from a DTA unit located in the territory of India. Therefore, at all points in time, the goods remain in India itself. Hence, on de-bonding, there is no question of goods being said to have been imported into India and demand of custom duty on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of final product. This contention is without any legal basis. 28. We find that as per Rule 3 of the Cenvat Credit Rules, 2004 allows cenvat credit of the duty paid on goods procured by the Respondent is available provided the following conditions are satisfied: (i) the goods imported or indigenously procured qualify as 'inputs' or capital goods' in terms of definition under Cenvat Credit Rules, 2004; (ii) capital goods and inputs are received in the factory of the manufacturer; and (iii) the capital goods and inputs are used in the factory of the manufacturer for manufacture of excisable goods or used for providing any output service. 29. We find that in the instant case, inputs and capital goods fall within the definition of 'input' and 'capital goods' as defined under Cenvat Credit Rules, 2004. This fact is not under dispute. The said inputs and capital goods were received in the factory of manufacturer and the same have been used in the manufacture of final products (excisable goods). This fact is also not under dispute. Furthermore, the Respondent has issued invoice under Rule 11 of the Central Excise Rules, 2002 while making payment of duty on such indigenous procurem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards payment of Customs duty on imported capital goods from Development Commissioner on August 03, 2011, and thereafter, the DFGT granted EPCG license to the Respondent. As admitted in the show cause notice, the Respondent presented such EPCG licenses towards discharge of duty on imported capital goods; however, the same was rejected on the sole ground that these licenses were obtained pursuant to the cut-off date. These facts have been ignored by the department in their show cause notice as well as appeals filed by them. Hence, the entire case of the department is frivolous and based on incorrect facts. Thus, the payment of customs duty through EPCG and advance license is correct and is in accordance with procedure provided in the FTP 2009-14. 33. Second, Para 6.18 of the FTP 2009-14 prescribes that the Development Commissioner may submit an EOU to exit from the EOU scheme by availing the benefit under EPCG Scheme subject to fulfilment of the positive NFEE criteria. Similarly, Notification No.52/2003-Cus also provides for utilization of EPCG License for discharging Customs duty on de-bonding of capital goods, subject to fulfilment of positive NFEE criteria by such EOU (Refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished goods exported and raw material re-exported after the cut-off date as the respondent shall not be eligible for the benefits available to an EOU. There is no basis for this argument. 38. We find that the respondent did not discharge duty on finished goods amounting to Rs. 58,27,344/- (Prill) &Rs.10,90,669/- (Oral), lying in exit stock, which were exported out of India under Bond B-17, before the issuance of No Due Certificate by the Deputy Commissioner. Further, the respondent discharged duty of Rs. 62,91,409/- (Prill) & Rs. 18,67,092/- (Oral) on the balance finished goods lying in stock at the time of payment of duty by debiting in their cenvat credit. In terms of note to Appendix 14-I-L of the HBP V1 which provides that a 100% EOU continues to be treated as EOU till the date of final exit order and such view is also expressed in various judicial precedents. The respondent cannot be placed in an indeterminate state in the intervening period till the NDC or final de-bonding order is obtained. Therefore, the respondent unit continues to remain an EOU till the date of final de-bonding order and is eligible to export finished goods without payment of duty under Bond B-17. This v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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