2014 (7) TMI 269 - AT - Central Excise

Remand of Duty Liability and Penalties for EOU Operations

VOLANT TEXTILE MILLS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III

VOLANT TEXTILE MILLS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III - 2014 (300) E.L.T. 428 (Tri. - Mumbai) Issues:1. Duty liability on clandestinely manufactured and cleared fabrics.2. Benefit of Notification No. 8/97-C.E. for duty exemption.3. Benefit of Notification No. 2/95-C.E. for concessional rate of duty.Issue 1: Duty liability on clandestinely manufactured and cleared fabrics:The case involved M/s. Volant Textile Mills Ltd., a 100% EOU, accused of clandestinely manufacturing and clearing fabrics without payment of duty, evading substantial Central Excise duty. The investigation revealed collusion with various entities for these activities. A show cause notice was issued demanding excise duty, interest, and penalties. The duty demands were confirmed, including penalties on the Managing Director. The appellant contested the duty demands, leading to the appeal.Issue 2: Benefit of Notification No. 8/97-C.E. for duty exemption:The appellant argued they had requisite permissions for clearing fabrics into DTA during the impugned period. The adjudicating authority acknowledged the goods were allowed to be sold in India by the Development Commissioner but did not extend the benefit of Notification No. 8/97-C.E., which exempted goods produced in a 100% EOU wholly from raw materials produced in India. The appellant's claim for this benefit was rejected based on the duty-free procurement of raw materials.Issue 3: Benefit of Notification No. 2/95-C.E. for concessional rate of duty:The appellant also sought the benefit of Notification No. 2/95-C.E., providing a concessional rate of duty subject to specific conditions. The adjudicating authority found the appellant did not provide evidence to show compliance with the entitlement conditions. However, the appellant had obtained post facto permissions for certain clearances in DTA, making them eligible for the concessional rate of duty. The duty liability was to be recomputed by extending the benefit of this notification for permissible clearances.In conclusion, the Tribunal remanded the matter back to the adjudicating authority for a fresh consideration of duty liability and penal liabilities, allowing the appeals by way of remand. The judgment highlighted the importance of complying with notification conditions for duty exemptions and concessional rates, emphasizing the need for proper documentation and adherence to legal provisions in EOU operations.