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TMI Blog2024 (6) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... red to Domestic Tariff Area (DTA) necessary permission from the Development Commissioner was obtained before such clearance. Similarly, whenever the inputs are procured locally the appellant had also availed Central Excise duty exemption under Notification No.22/2003- C.E. dated 31.03.2003, as amended. 2.2 During the verification of the periodical returns filed by the Range Officer of the jurisdictional Commissionerate, he pointed out that in respect of certain inputs which are used in the finished goods which are also exempted from duty, the availment of customs duty exemption is incorrect. Accordingly, the appellant had paid the duty of Rs.24,13,416/- being duty foregone on the inputs which have entered into the manufacture of exempted final products during the said period. The said amount was paid partly from PLA account for Rs.6,21,721/- and the balance of Rs.17,91,695/- from Cenvat credit. The Department objected to the payment of duty through Cenvat credit and proceeded with issue of Show Cause Notice (SCN) dated 25.10.2017. The said SCN was adjudicated by the original authority in confirmation of the customs duty of Rs.17,91,695/- along with interest to be recovered in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of the Customs Act, 1962. 6.2 The relevant portion of the said Notification No.52/2003-Cus. dated 31.03.2003 is reproduced below : "In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the said Customs Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts, - (a) all goods as specified in the Annexure-I to this notification, when imported or procured from a Public Warehouse or a Private Warehouse appointed or licensed, as the case may be, under section 57 or section 58 of the said Customs Act or from international exhibition held in India for the purposes of - (i) manufacture of articles for export or for being used in connection with the production or packaging or job work for export of goods or services by export-oriented undertaking (hereinafter referred to as the unit) other than those referred to in clauses (b), (c) and (e), or (ii) manufacture or development of software, data entry and conversion, data processing, data analysis and control data management or call center services for export by Software Technology Park ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the above Notification, indicate that there is a restriction in availing the duty exemption, when the imported inputs are intended for use in the finished goods, which are non-excisable or exempted or attracting NIL rate of duty. In this case, it is not clear that whether the appellant was aware that the imported inputs may be used in the lifesaving drugs which are exempted from payment of duty. Further, the Department had not produced any evidence or the fact that the appellant had taken the exemption with an intention to evade duty. In the above factual matrix of the case, demand of duty under Section 28(4) of the Customs Act, 1962 invoking extended period is not sustainable. 6.2 I further find that the above issue for consideration before me is no more open to debate as the issue has been discussed at length and was decided by the Co-ordinate Bench of the Tribunal in the appellant's own case in Excise Appeals No. 1389 of 2011, No. 2249 of 2012 and No.30017 of 2019. The relevant paragraphs of the said order is extracted and given below: "The Appellant is manufacturer of various pharma products and is registered as 100% EOU. For the raw materials imported by them, they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to the appellant, it was customs duty which was paid by the respondent on the DTA clearances. The show-cause notices were issued on this premise. It is settled law that what is paid by a 100% EOU on DTA clearances is duty of excise (for the period of dispute in this case) which is calculated as aggregate of duties of customs which would have been leviable if the same goods had been imported at the relevant time. In other words, the duties of customs constitute just a measure of the duty of excise to be paid on the DTA clearance. This legal position was settled by this Tribunal and appellate courts long ago. No overriding decision of any competent court to the contra has been cited before me. 6. The respondent paid duty of excise on the imported inputs cleared 'as such' to their sister concern in DTA. It was paid under appropriate account head. The respondent was entitled to pay such duty either wholly from PLA or partly from PLA and partly from CENVAT account. There is no law denying this right to a 100% EOU. The appeals filed by the department are ill-conceived and the same are rejected.' [Emphasis supplied] 8. In the case of Hetero Labs (cited supra), the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le that such DTA clearances were made on payment of duty of excise which was calculated in terms of the proviso to Section 3(1) of the Central Excise Act. There is no dispute regarding the amount of duty so paid. According to the appellant, it was customs duty which was paid by the respondent on the DTA clearances. The show-cause notices were issued on this premise. It is settled law that what is paid by a 100% EOU on DTA clearances is duty of excise (for the period of dispute in this case) which is calculated as aggregate of duties of customs which would have been leviable if the same goods had been imported at the relevant time. In other words, the duties of customs constitute just a measure of the duty of excise to be paid on the DTA clearance. This legal position was settled by this Tribunal and appellate courts long ago. No overriding decision of any competent court to the contra has been cited before me." Respectfully following the same, I find that these Department's appeals are liable to be rejected. 8. Reliance by the Departmental representative on the Division Bench decision in Stay Order dt. 28/12/2011 will not carry the case of the Revenue any further inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such capital goods are removed as such; or (d) An amount under sub-rule (2) of Rule 16 of Central Excise Rules, 2002; or (e) Service tax on any output service; It can be seen from the relevant portions of the CENVAT credit Rules clearly indicate that the CENVAT credit cannot be utilised for payment of customs duty. 7. In the case in hand, Revenue authorities are correct in demanding the amount of customs duty, in cash, on the raw materials consumed for manufacture of finished goods which are cleared to DTA by claiming exemption. In our view, no provisions in the CENVAT Credit Rules permit the appellant herein to use the balance for discharging the customs duty on the imported goods 8. At the same time, learned counsel was correct in stating that if all the amounts which are due from the appellants if paid in cash, the CENVAT credit which has been debited should be restored. We do find strong force in these contentions. We direct that the appellant should discharge all the customs duty in cash, calculated by the Revenue authorities, on the imported goods consumed in manufacturing of final products cleared to DTA claiming exemption, on that occurrence of event CENVAT credit w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Matrix Laboratories Ltd vs CCE, Hyderabad (cited supra) and CC & CE, Hyderabad-IV vs Hetero Labs (cited supra), the Tribunal has held that the clearances can be made by utilizing the Cenvat credit. Therefore, we can assume that the Appellant could be holding bonafide belief that they are eligible to utilize Cenvat credit for only clearances. Further as there are Tribunal decisions in their favour during the period under dispute, the issue would be that of interpretation only. Taking all these facts into account, we feel that the Department cannot allege any suppression on part of the Appellant. Therefore, we hold that the demand pertaining to the extended period is liable to be set aside in all the Appeals, wherever the demand has been confirmed for the extended period. We allow the Appeal to this extent. 14. The Appellant is required to pay the duty involved for the normal period. Since the duty was already paid by way of Cenvat credit, there being no revenue loss to the Department, interest and penalties are set aside. 15. Since the Appellant is making good the payment by way of cash, the Appellant would be entitled to get the relief for the Cenvat debits already made by ..... 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