2014 (2) TMI 916 - AT - Central Excise

Tribunal Upholds Demands for Breach of Notification 1/95-CE by 100% EOU Units

VIBHA IMPEX AND JANNAT FABRICS Versus COMMISSIONER OF CENTRAL EXCISE, NASHIK

VIBHA IMPEX AND JANNAT FABRICS Versus COMMISSIONER OF CENTRAL EXCISE, NASHIK - TMI Issues:Appeal against demand, interest, and penalty for 100% EOU units under Notification 1/95-CE - Contention of demands being time-barred under Section 11A of the Central Excise Act.Analysis:The judgment involves multiple appeals by different entities against demands, interest, and penalties for violating conditions of Notification 1/95-CE related to 100% EOU units. The primary issue revolves around the contention that the demands made are time-barred under Section 11A of the Central Excise Act.Detailed Analysis:The appellants, engaged in manufacturing polyester yarn and fabrics under the EOU scheme, were found to have procured raw materials without duty payment and cleared them to the DTA in violation of notification conditions. The demands, along with interest and penalties, were confirmed by the adjudicating authority. The sole argument presented by the appellants was that the demands were time-barred as show cause notices were issued after five years from the period in dispute, citing Section 11A provisions.The Revenue's stance was based on thorough investigations revealing clandestine clearance of goods without duty payment. Evidence collected from transporters, recipients, and even the proprietors themselves indicated violations of notification conditions. The Revenue argued that the five-year limitation for issuing show cause notices in cases of suppression or fraud starts from the date of knowledge. The Revenue relied on Supreme Court decisions to support the timely issuance of show cause notices in light of the appellants' admission of violations.The Tribunal found that the appellants did not contest the demands on merits but solely on the grounds of being time-barred. Detailed investigations revealed discrepancies in the records maintained by the appellants, indicating clandestine clearances to DTA. The Tribunal noted the appellants' failure to deny these violations and emphasized Supreme Court decisions interpreting Section 11A to compute limitation periods based on the date of knowledge.Ultimately, the Tribunal dismissed the appeals, highlighting that the demands were not disputed on merits, and the evidence collected supported the timely issuance of show cause notices within the five-year period from the date of knowledge. The Tribunal found no merit in the appellants' argument that the demands were time-barred under Section 11A, leading to the dismissal of the appeals.