2013 (9) TMI 613 - AT - Central Excise

Tribunal remands duty exemption denial case, reduces penalty, and sets aside duty demand

The Tribunal partially upheld the denial of duty exemption for DTA clearances by an EOU manufacturing galvanised pipes, citing the use of both imported ... 100% EOU - Duty Chargeable on DTA Clearances - Exemption under Notification No. 8/97-C.E. - The appellant had made DTA clearances of galvanised pipes by availing duty exemption under Notification No. 8/97-C.E - The department was of the view that the appellant were not eligible for the exemption under the notification - Whether the appellant during period were eligible for Notification No. 8/97-C.E. in respect of their DTA clearances - Held that:- The benefit of Notification No. 8/97-C.E. would be available in respect of DTA clearances made in accordance with the provisions of EXIM Policy, only if the goods had been made out of the inputs of the Indian origin - the benefit of Notification No. 8/97-C.E. can be allowed to a 100% EOU in respect of DTA clearances even if the unit was using indigenously procured as well as imported raw materials, provided the unit was able to satisfy the Jurisdictional Central Excise Authorities beyond doubt that inputs used in the manufacture of goods which were to be sold in DTA had been manufactured out of indigenous raw material only by the way of maintenance of records, physical scrutiny/verification of manufacturing process etc. The appellant were not eligible for Notification No. 8/97-C.E. - the duty demand and penalty was set aside and the matter was remanded to the original Adjudicating Authority for re-quantification of the duty demand after examining the appellant’s plea regarding their eligibility for Notification No. 2/95-C.E. and also re-determining the quantum of penalty on the basis of duty demand re-determined. - Matter Remanded back – Decided partly in favour of Assessee. Period of Limitation - As regards the Revenue’s appeal - the Revenue’s contention that the duty demand if any, for the period from July 1997 to November 1997 raised vide show cause notice 4-2-1998 would be within time and no part of the duty demand would be time-barred was upheld – Decided in favour of Revenue. Issues:- Eligibility for duty exemption under Notification No. 8/97-C.E. for DTA clearances- Reduction of penalty by the Commissioner (Appeals)- Time-barred duty demand for the period from July 1997 to November 1997Eligibility for duty exemption under Notification No. 8/97-C.E. for DTA clearances:The case involved a dispute regarding the duty chargeable on DTA clearances made by an EOU engaged in manufacturing M.S. Galvanised pipes. The appellant had used both imported and indigenous zinc for galvanising during a specific period. The department contended that the appellant was not eligible for duty exemption under Notification No. 8/97-C.E. as the galvanised pipes were not wholly manufactured from indigenous inputs. The Commissioner (Appeals) partially upheld the denial of exemption and reduced the penalty. The appellant argued that they had used only indigenous zinc from a certain date and maintained separate accounts for imported and indigenous zinc. The Tribunal found that some imported zinc would remain in the kettle during the switch to indigenous zinc, making it impossible to claim that the pipes were wholly made from indigenous zinc. However, the Tribunal noted that the eligibility for another duty exemption under Notification No. 2/95-C.E. had not been considered, remanding the matter for re-quantification based on this consideration.Reduction of penalty by the Commissioner (Appeals):The Commissioner (Appeals) had reduced the penalty imposed on the appellant, which was challenged by the Revenue in their appeal. The appellant argued against the imposition of any penalty, stating that the circumstances did not warrant it. The Tribunal, after considering both sides, set aside the duty demand and penalty while remanding the matter for re-quantification based on the appellant's eligibility for another duty exemption. The Tribunal found no merit in the Revenue's plea for enhancing the penalty.Time-barred duty demand for the period from July 1997 to November 1997:The Revenue contended that the duty demand for the specified period was not time-barred, as per the show cause notice issued. The Tribunal agreed with the Revenue's argument, stating that no part of the duty demand was time-barred. Consequently, the duty demand and penalty were set aside, and the matter was remanded for re-quantification based on the appellant's eligibility for a different duty exemption, along with a re-determination of the penalty amount. Both appeals by the appellant-company and the Revenue were disposed of accordingly.