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TMI Blog2025 (5) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... formance for block of five years ending 31.03.2015, on the basis of Annual Performance Reports (API), it was revealed that the NFE for the period 2010-2015 was negative. Accordingly, show cause notice dated 15.05.2015 was issued by DC, KASEZ, Gandhidham to the Appellant to show cause as to why action be not taken for cancellation of LOP under Section 9 of Foreign Trade (Development and Registration) Act, 1992 read with Rule 10 of the Foreign Trade (Regulation Rules) 1993 and imposition of penalty under section 11 of the Foreign Trade (Development and Registration) Act, 1992. The DC KASEZ, Gandhidham, vide Order dated 07.09.2015 upheld the averments raised in the show cause notice and imposed penalty of Rs. One Crore on the Appellant. The Appellant has been availing the benefits of Notification No. 22/2003-CE dated 31.03.2003 and Notification No. 52/2003-Cus dated 31.03.2003 for procuring the goods/ importing the goods without payment of Central Excise/ Customs Duty, in accordance with the conditions mentioned in the said notifications. Since, it was noticed on the basis of the order-in-original dated 07.09.2015 that the Appellant has achieved negative NFE and had not fulfilled the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fact that we had furnished the bond and the LOP was also extended from time to time and even for the period after the issuance of the impugned order. Nowhere para 4(b) & para 3(d) provides that in case the assessee does not achieve Net Foreign Exchange earnings, as provided under FTP, the exemption would be withdrawn and would not be available for the procurement of goods / duty-free inputs for the purposes specified in the notification. Therefore, appellant has duly complied with the condition stipulated under para 4(b) and para 3(d) of the exemption Notifications 22/2003-CX dated 31/03/2003 and 52/2003-Customs dated 31.03.2003 respectively by furnishing the bond and hence the impugned order recovering the duties in the absence of any breach in the conditions cannot be sustained. 3.1 Learned Counsel for the appellant further argued that the impugned order is without any basis since the encashment of bond as stipulated in para 4(b) and para 3(d) of the exemption notifications 22/2003-CX dated 31.03.2003 and 52/2003-Customs dated. 31.03.2003 respectively, is permissible only when there is a permanent failure to achieve net foreign exchange earnings and LOP is cancelled leading t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the impugned order fails to provide any basis for arriving at the liability under para 4(b) and para 3(d) of the exemption notifications 22/2003-CX dated 31.03.2003 & 52/2003-Customs dated 31.03.2003 as the said provisions permit only recovery on a pro-rata basis. The Annexure A to the show cause notice was demanded at the time of adjudication but the same was not provided. Hence even on this ground the impugned order fails to meet the principle of natural justice and deserves to be quashed. 3.3 Learned Counsel for the appellant argues that the show cause notice invokes an extended period of limitation. The non-achievement of net foreign exchange earnings was on account of external business exigencies. Appellants have regularly filed all the returns etc. disclosing the net foreign exchange earnings achieved and Revenue was fully aware of the fact of negative net foreign exchange earnings. In such facts there cannot be any suppression of facts or intention to evade. Further, the demands of excise duty are revenue neutral inasmuch as the same is duly entitled to CENVAT Credit and refund owing to 100% exports. Hence even on this ground, the impugned order deserves to be set-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of para 3(d) of Notification No.52/2004-Cus dated 31.03.2003 which are as under :- Para-4 (b) of Notification No. 22/2003-CE dated 31.03.2003 reads as under:- "(4) the user industry executies a bond with the Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise or Deputy or Deputy Commissioner of Custody or Assistant Commissioner of Customs, as the case may be, (hereinafter referred to as the said officer) in the prescribed form and for such sum as may be specified by the said officer for the proper account of the receipt, storage and utilization of such goods, to achieve positive Net. Foreign exchange Earning and comply with conditions stipulated in this notification and the Export and Import Policy and binding itself to pay on demand:- (a) an amount equal to duty leviable on the goods and interest at the rate specified in the notification of the Government of India, Ministry of Finance, Department of Revenue issued under section 11 AB of Central Excise Act, 1944 (1 of 1944) from the date of duty free procurement of the said goods till the date of payment of such duty, if- (i) in the case of capital goods, such goods are not proved to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to the portion of the duty leviable on the said goods but for the exemption contained in this notification and the duty so payable shall bear the same proportion as the unachieved portion of Net Foreign Exchange Earning bears to the positive Net Foreign Exchange Earning to be achieved along with interest at the rate as specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue) issued under section 28AB of the said Customs Act, on the said duty to be paid on demand from the date of importation or procurement of the said goods till the payment of such duty. " 8. There is no controversy regarding the fact that appellants failed to achieve positive NFE and could not export the goods to achieve positive NFE earning for the period 2010-15 having procured goods without payment of duty. 8.1 The main argument of the appellant is that they have duly complied with the condition stipulated in para 4(b) and 3(d) of exemption Notifications No. 22/2003-CE and 52/3003-Cus dated 31.03.2003 respectively by furnishing bond and hence the impugned order to recover the duty in the absence of any breach of conditions, cannot be sustained. I do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation. 8.3 The learned Counsel for the appellant has forcefully argued that DC- KASEZ has not cancelled the LOP granted to the appellant and has simply imposed the penalty for not achieving positive net foreign exchange earnings. The Revenue has not issued show cause notice proposing to recover the duty etc. The department issued CT-3 certificates even though there was negative NFE earnings and the appellant was entitled to the benefits of notifications. It is contended that if the appellant breached the conditions of the above mentioned notification CT-3 certificates would not have been issued authorizing appellant to procure material duty free. I am of the view that the argument of the appellant as mentioned above cannot be accepted because there is not doubt that the appellant has violated the conditions of Notification No. 22/2003-CE and 52/3003-Cus dated 31.03.2003 inasmuch as they have failed to achieve positive NFE earnings during the period 2010-11 to 2014-15. Therefore, the Revenue was justified to confirm the demand and order recovery of Central Excise duty and Customs duty from the appellants. Even though the department has issued CT-3 certificates, the issue remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot for the Financial Year 2016 to 2019. 8.6 The learned Counsel cited the decision in the case of M/s. Paras Fab International - 2010 (256) ELT 556 (Tri.LB) in which it has been held by the Principal Bench, New Delhi that the entire premises of EOU has to be treated as a warehouse if the license granted under Section 58 to the unit is in respect of the entire premises and imported goods warehoused in the premises of a 100% EOU, which is licensed as a Customs bonded warehouse and used for the purpose of manufacturing in bond as authorised under Section 65 of the Customs Act, 1962, cannot be treated to have been removed for home consumption. 8.7 The learned Counsel for the appellant has also cited the decision Reliance Industries Limited vs. Commissioner of Customs, Rajkot - 2013 (287) ELT 433 (Tri. Ahmd.) in which it has been held that inputs duty foregone by department, consumed in EOU after filing in-bond bill of entry or documents like re-warehousing certificate which indicated that goods were warehoused in EOU's licensed warehouse and no allegation made for removal of inputs as such, it was held that no duty was required to be paid as inputs were consumed in EOU which is treat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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