2017 (4) TMI 210 - AT - Central Excise

Tribunal upholds dismissal of Revenue's appeal on differential duty demand, citing respondent's prompt rectification.

The Tribunal dismissed the Revenue's appeal, upholding the impugned order that the demand for differential duty was not sustainable during the relevant ... 100% EOU - benefit of N/N. 23/2003-C.E., dated 31-3-2003 - benefit of drawback on the duty paid on the indigenously procured inputs - Held that: - There is nothing on record to show that the intended benefit was sought to be misused by the respondent by devising colourable methods - during the period 1-7-2007 to 16-5-2008 when the DTA clearances were made by the respondent, they had not availed any benefit of deemed export, on the raw materials used. Thus, during the said period, they were eligible for the benefit in terms of Sl. No. 3 of the N/N. 23/2003-C.E - benefit allowed - appeal dismissed - decided against Revenue. Issues involved:1. Interpretation of Notification No. 23/2003-C.E. dated 31-3-2003 and its subsequent amendment on 6-9-2007.2. Claiming concessional rate of duty for domestic market clearances by 100% EOU using indigenously procured raw materials.3. Denial of benefit of deemed export under Paragraph 8.3(a) and (b) of FTP.4. Validity of drawback claim filed by the respondent on duty paid on indigenously procured inputs.5. Applicability of proviso to Section 3(i) of the Central Excise Act, 1944.6. Alleged violation of conditions of the notification by the respondent.7. Legal consequences of subsequent surrender of benefit of drawback by the respondent.8. Determination of eligibility for concessional rate of duty under the notification.Detailed Analysis:1. The case involved a dispute regarding the eligibility of a 100% EOU engaged in manufacturing Cotton Yarn and fabrics using only indigenously raw materials for claiming concessional duty rates under Notification No. 23/2003-C.E. The notification was amended on 6-9-2007, imposing a condition that EOU cannot claim deemed export benefits. The period in question was 1-7-2007 to 16-5-2008.2. The Revenue contended that the respondent's pursuit of drawback relief on inputs violated the notification's conditions, thereby disentitling them from claiming the concessional rate of duty. The Revenue argued that subsequent surrender of the benefit would not absolve the respondent from the legal consequences.3. The respondent argued that they never claimed double benefits and only filed the drawback claim later, realizing it was covered by the amended notification. They promptly repaid the amount upon discovering the issue, maintaining that their repayment should not lead to denial of the concessional duty rate.4. The Tribunal noted that the respondent, while eligible for the concessional duty rate under the notification, had inadvertently claimed deemed export benefits on indigenously procured inputs, leading to their debarment as per the notification's explanation. The respondent promptly rectified the error by repaying the amount upon realization, showing no misuse of intended benefits.5. The Tribunal found no evidence of misuse or intentional violation by the respondent, acknowledging their bona fide actions and compliance with the notification's conditions. As such, the Tribunal dismissed the appeal, upholding the impugned order that the demand for differential duty was not sustainable during the relevant period.In conclusion, the Tribunal's decision centered on the respondent's inadvertent error in claiming deemed export benefits, prompt rectification upon realization, and overall compliance with the notification's conditions, leading to the dismissal of the Revenue's appeal.