TMI Blog2022 (5) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities. On the basis of the No Dues Certificate issued by the concerned jurisdictional authorities, Development Commissioner has issued the Final Debonding Order. If it is the case of the revenue that No Dues Certificate was obtained by the appellant by taking recourse to suppression. misstatement, misdeclaration, fraud, connivance or in contravention of the provisions of the law, which would have led to invocation of extended period of limitation as provided for by Section 11 A of the Central excise Act, 1944, revenue ought to have informed the Development commissioner and requested for initiation of proceeding against the appellants in terms of Foreign Trade Development Act. There are no ingredients for invoking the extended period of limitation as per Section 11 A of Central Excise Act, 1944 to be present in this case. Since demand cannot be sustained on the issue of limitation we do not discuss the issue on the merits. Appeal allowed - decided in favor of appellant. - Excise Appeal No. 87205 of 2016 - FINAL ORDER NO. A/85432/2022 - Dated:- 30-3-2022 - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) AND DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri S. Naray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken against the noticee under the provisions of Chapter-V of the Finance Act, 1994 and/ or the rules made thereunder and/ or any other law for the time being in force. 2.1 Appellant was erstwhile a 100% Export Oriented Unit. After fulfilling the export obligations as per the scheme, the de- bonded and got converted into an DTA unit. At the time of debonding they paid the debonding duty as required and after satisfying in respect of the payment of debonding duty, they were issued No Dues Certificate by the jurisdictional Assistant Commissioner, vide his letter dated 21st May 2013. Taking note of the No Dues Certificate , Development Commissioner, vide order dated 04.07.2013, issued Final Debonding Order . 2.2 A show cause notice dated 09.02.2016, was issued to the appellant, alleging that they had short-paid the duty at the time of De-bonding, stating following grounds: (i) Para 6.18 of FTP contains provisions regarding conditions and procedures subject to which an EOU can exit from the EOU scheme. It is provided in Para 6.18 (b) that the assessee shall assess duty liability arising out of de-bonding and aster paying applicable duties, it shall obtain No dues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention of provisions of Section 3 (1) of the Central Excise Act, 1944 read with para 6.18 of FTP. Interest was also demanded on the duty short paid and penalty was proposed as per Section 11AC, ibid. 2.4 The show cause notice was adjudicated as per the impugned order referred in para 1, above. Aggrieved by the impugned order, appellants have filed this appeal. 3.1 We have heard Shri S. Narayanan, Advocate for the appellant and Shri Sydney D Silva, Additional Commissioner, Authorized Representative for the revenue. 4.1 We have considered the impugned order along with the submission made in appeal and during the course of hearing. 4.2 In the present case admittedly the appellant was earlier functioning as an 100% Export Oriented Unit and was following the prescriptions as laid down in Foreign Trade Policy, Customs Act, 1962 and Central Excise Act, 1944. After achieving the required NFE norms as determined by the Development Commissioner, they applied for permission to de-bond and exit from the scheme vide their letter dated 29.11.2012./ 03.12.2012. Along with the application they also submitted Summary of Imported Indigenous: Inputs Goods , which is placed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64,429,737 4% Additional Duty 2,577,189 Total Duty 15,003,846 5 Work in Process Indigenous Assessable value 52,634,686 12% Excise Duty 6,316,162 2% Edu. Cess 126,323 1% S H Edu Cess 63,162 Total Duty 6,505,647 4.3 After getting permission for In-principle exit of unit from the Development Commissioner, appellants approached the jurisdictional Central Excise Authorities for issuance of No Dues Certificate . After consideration of the request and due verification jurisdictional assistant Commissioner issued the No Dues Certificate to the appellant vide his letter dated 21st May 2013. The No Dues Certificate issued by the jurisdictional officer is as follows: OFFICE OF THE ASSISTANT COMMISSIONER. CENTRAL EXCISE PUNE-IV DIVN. EXCISE BHAVAN, AKURDI, PUNE-411 044. F.NO. PIV/Tech (303)VVCL/UT-1/2013-14/1508A Akurdi, 21st May, 2013. , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Additional Duty paid on 3.4.2013. 33,63,446.00 7 Grand total of duty paid 6,63,10,764.00 Capital Goods: Sr. No. Category Assessable Value Duty Amount 1 2 3 4 1 Capital Goods 2,60,52,015.90 * 70,33,215.16 N.B.* This is amount of duty foregone as per the E.P.C.G. License No.3130007338 dated 7.5.2013 issued by D.G.F.T.Pune; allowing the said EOU for conversion of DTA as per Para 6.18 of FT.P.and Para 5.4 of Handbook of Procedure 2009-14. In view of the above No dues are payable by the unit in respect of imported/ indigenous capital goods and raw material. Yours Sincerely, Sd/- 21/5/2013 ( B.S.CHAUHAN ) Assistant Commissioner, C.Ex.Pune IV Division Copy to: Supdt.,C.Ex., Thergaon Range w.r.t. his letter F.No.TR/VVCL//De-bonding/ 2012-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on vide letter No. PIV/Tech(303)VVCL/UT-1/2013 14/1508A dated 21.05.2013 certified that there are no dues pending against the unit. 5. AND WHEREAS, unit vide letter dated 10.04.2013 has given undertaking for exit from EOU Scheme for payment of penalties as may be imposed upon them under FT (D R) Act, 1992 for violation of any conditions, 6. AND WHEREAS, unit' has submitted an Undertaking that it has not claimed and will not claim any deemed export benefits viz. CST/DBK/TED on the balance stock, if any, of raw material. 7. NOW THEREFORE, the said M/s Virgo Valves Controls Ltd. is hereby allowed final de-bonding of their project covered under Letter of Permission No. PER:33(2004)/SEEPZ/EOU/33/04 05/6910 dated 30.8.2004 as amended. 8. The Letter of Permission No. PER:33(2004)/SEEPZ/EOU/33/04 05/6910 dated 30.8.2004 as amended for manufacture and export of Control Valves and Ball Valves at A128/2, Telco Road, Chinchwad, Pune, Maharashtra and any other permission granted to unit' under EQU Scheme is hereby cancelled with immediate effect. Sd/- (NPS Monga) Development Commissioner, SEEPZ SEZ. M/s Virgo Valves Controls Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on work in progress material and further the guidelines under Appendix 14-I-L which deals with exit from 100% EOU refers only to imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods in stock and it has no reference to work in progress material, it is also reasonable to entertain a thought that no duties are applicable and to be paid on such work in progress material, which view is also supported by a Tribunal decision rendered in this regard. 11.07 It is further stated by the Noticee that the Central Board of Excise and Customs, while issuing clarification to Central Excise matter dealing with reversal of Cenvat on WIP goods written off, under their Circular no.907/27/2009-CX., dated 07- 12-2009 issued from F.No.267/141/2009-CX-8 has clarified in the context of WIP goods (which has reached the stage of finished goods) the treatment for reversal of credit applicable to input would be applicable. Though the said reference is in the context of Central Excise but in principle the clarification applies pari materia and hence, what can be demanded at best on the stock of work in progress material is only the duty foregone by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment with respect to indigenous and imported raw materials as applicable separately, instead of assessing the same as a manufactured goods. Thus it has fraudulently issued invoice for WIP (indigenous) without actually accompanying any goods or any such goods manufactured exclusively out of indigenously procured raw materials with it. In doing so, the Noticee appears to have misrepresented and fabricated the facts thereby and made the department to believe that it has discharged its duty liability correctly and whereas, by its deliberate act it has in fact effected short assessment of duty and appears to have evaded duty thereby. Not challenging the declaration does not mean that correct duty should not be collected. It is a case of valuation loading of 15%on WIP goods. However, it has been claimed by the Noticee that while arriving at the assessable value of WIP goods it had considered 15% value addition on WIP goods though not produced any evidences in support of the same. But the Noticee stated that the duty so paid thereon was on higher side and hence they are entitled to refund to that extent. In this context it is observed that if there is excess payment then assessee is to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia stated that during the period in question in the present show cause notice, they did have a +ve NFE and further as they had export clearances of Rs.298,55,27000/- they were also indeed entitled for 50 % DTA clearances of Rs. 149,27,63500/- and hence the clearance of FG on de-bonding to the value of Rs. 79,21,864/-from 100 % EOU Unit to their DTA unit did also qualify for such exemption at concessional rate of duty and thus duly fulfilling the FTP requirement as per Para 6.8 of FTP and thus on this account as well, the said duty paid on de-bonding on FG goods are clearly applicable in law to them, in terms of Notification No. 23/2003- CE and there is no cause for demanding full duty on such DTA clearances, as has been wrongly proposed in the present show cause notice. 11.10 It is also stated by the Noticee that the issue under reference in the present show cause notice while they have considered the concessional rate of duty applicable for DTA clearances on the finished goods held in stock at the time of de- bonding and applied the duties as applicable under Notification No. 23/2003-CE by paying duty of Rs.1810393/ which has been accepted by the department while issuing &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of finished goods from EOU unit to DTA unit at the time of de bonding has to be considered in law as a normal DTA sale effected by EOU unit. 11.13 It is observed that Para 6.18 of FTP contains provisions regarding conditions and procedures subject to which an EOU can Exit from the EOU scheme. The duty payable on goods being de-bonded is an amount equal to aggregate of the Custom duties as per proviso to Section 3(1) of the Central Excise Act, 1944. Entitlement to clear goods at concessional rate of duties as per Section 6.8 of FTP is not available to a de-bonding unit, as the Exit from EOU scheme is allowed under Para 6.18. Achievement of positive NFE is a requisite to avail export benefits and it has nothing to do with exit of EOU i.e. De- bonding of EOU. Duty foregone concept is available in respect of EOU goods for use in export and not in de-bonding i.e. clearance of goods to unit going as normal unit as no concept DTA apply now. It therefore appears that the Noticee has wrongly considered the concessional rate of duty applicable for DTA clearances on the finished goods held in stock at the time of de- bonding and wrongly applied the duties as applicable under Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panying any goods or any such goods manufactured exclusively out of indigenously procured raw materials with it. In doing so, the Noticee appears to have misrepresented and fabricated the facts thereby and made the department to believe that it has discharged its duty liability correctly and whereas, by its deliberate act it has in fact effected short assessment of duty and appears to have evaded duty thereby. (iii) Thus, it is clear that the Noticee, has suppressed the material facts it was under-assessing duty. As per Rules 9 (5) of the CCR 2004, the burden of proof regarding admissibility lies upon the Noticee. The said facts were also not disclosed by it in its monthly returns filed with the Department. The Noticee, being from the organized sector, being an EOU, and working under self- assessment regime, ought to have interpreted law correctly and accordingly should have made proper and appropriate assessment of duty. In view of these circumstances the various case laws cited by the Noticee in support of their claim that that Central Excise authorities cannot independently decide the issue in such cases without referring the matter to the Development Commissioner, need no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as mandatory. (vii) Thus, in view of the precedential rulings of the Hon'ble Apex Court and the High Court and the fact that the delinquency on part of the Noticee stands proved, they cannot be absolved of their statutory liabilities. Resultantly, by adhering to the principles of strict liability, it have to be held that the Noticee are liable for penalty under the provisions of erstwhile Rule 173 Q of Central Excise(no.2) Rules, 2001/2002,Rule 25(1) (d) read with Section 11AC of the CEA,1944, for having contravened the provisions of Section 4(1)(a)/4(1)(b) of the CEA, 1944 read with Rule 6 of Central Excise Valuation Rules, 2000.Accordingly, it is felt that the various judgments cited by the Noticee against imposition of penalty need not be discussed as not applicable in view of above facts and discussions. 4.8 Explaining the concept of bonding and de-bonding in respect of the 100 % EOU Hon ble Supreme Court has in case of SIV Industries [2000 (117) E.L.T. 281 (S.C.)} 23 . Concept of bonding or debonding is well understood both under the Act and the Customs Act, 1962. The entire operations of an EOU are to be in customs bonded factory, unless otherwise spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent, it is the duty of the officer, who give no dues certificate to verify the contents whether any dues liability is pending against the assessee or he has correctly declared the true facts for de-bonding of unit. When the concerned officer has de-bonded the unit along with no dues certificate, allegation of suppression cannot be alleged against the respondents in this case. Hence, we do not find any infirmity with the impugned order, wherein the lower appellate authority has held that facts that how the extended period under Section 11A(1) is invocable in the above circumstances, the demand raised against the respondent is time barred . Accordingly, the impugned order is upheld, the appeal filed by the Revenue is rejected. 4.10 In case of Navnitlal Pvt Ltd [2010 (262) ELT 656 (T-Mum)] following was observed: 8. The extended period is not invocable in the present case in the absence of any suppression, misstatement, etc. as the respondents had made an application for de-bonding to ACCE, after having obtained in principle approval from the Development Commissioner and the ACCE, through letter dated 25-8-2003, required the respondents to pay duty on capital goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further we also find that that on the basis of the No Dues Certificate issued by the concerned jurisdictional authorities, Development Commissioner has issued the Final Debonding Order. If it is the case of the revenue that No Dues Certificate was obtained by the appellant by taking recourse to suppression. misstatement, misdeclaration, fraud, connivance or in contravention of the provisions of the law, which would have led to invocation of extended period of limitation as provided for by Section 11 A of the Central excise Act, 1944, revenue ought to have informed the Development commissioner and requested for initiation of proceeding against the appellants in terms of Foreign Trade Development Act. Central Board of Excise and Customs has vide its Circular No 21/95_Cus dated 10.03.1995 clarified as follows: Issue of show cause notice for recovery of Customs Subject : duty on goods imported by 100% EOU - Regarding. A number of instances have come to the notice of the Board where 100% EOU s had imported capital goods, raw materials and other permissible items under Notification No. 13/81-Cus., dated 9-2-1981 but have failed to export any goods or have closed down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even in the event of failure to make or continue exports, the Development Commissioner s recommendation is required before duty demands can be confirmed by the Customs authorities. In this case, there is no definite conclusion arrived at by the concerned authority namely the Development Commissioner. On the other hand, the Development Commissioner has vide its letter dated 22-12-1998 extended the period of validity for a further period upto 31-3-1999 and the importers have further requested for further extension. Therefore, in the present case, the duty demand is premature and we see no option but to set aside the same. The penalty imposed on the appellants is also set aside. The order of confiscation is also set aside. Needles to say, it will be open to the Adjudicating authority to take appropriate action for recovery of duties in the event of the recommendations of the Development Commissioner in this regard, in accordance with law. B. ABN Granites Ltd [2001 (133) E.L.T. 483 (Tri. - Bang.)] 2 .Arguing for the appellants Shri K.S. Ravi Shankar, learned Advocate, submitted that the appellants being a 100% E.O.U., permission is required from the Development Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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