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of <h1>Tribunal upholds duty demand but sets aside penalty, emphasizing compliance and good faith actions.</h1> <h3>Chand Fruits Company P Ltd Versus Commissioner of Central Excise Pune – II</h3> Chand Fruits Company P Ltd Versus Commissioner of Central Excise Pune – II - 2020 (371) E.L.T. 883 (Tri. - Mumbai) Issues involved:Entitlement of the appellant to exemption from duty in the procurement of material for manufacture of goods under the Letter of Permission issued by the Development Commissioner under EXIM Policy 1997-2002.Detailed Analysis:1. The appellant, a trading unit under the 100% Export Oriented Unit scheme, sought exemption from central excise duties for the period from 24th June 2002 to 1st January 2004. The issue revolved around the amendment in the relevant notification that excluded 'trading units' from duty exemption benefits. The appellant argued that their compliance with the scheme at the time of obtaining the Letter of Permission should entitle them to the exemption despite subsequent policy changes.2. The legal framework governing exemptions from central excise duties is based on notifications issued under the Central Excise Act, 1944. The notifications in question did not provide exemptions to 'trading units' following policy changes. However, a subsequent notification in 2004 allowed existing trading units to continue operations until the validity of their permissions, indicating a transitional provision for such units.3. The appellant contended that they acted in good faith, following the earlier notification, and had the approval of central excise officers for their procurement activities. The appellant argued against the retrospective application of the amended notification and emphasized their legal entitlement to the exemption.4. The opposing argument highlighted that the scheme had transitioned to focus solely on manufacturing units, excluding trading activities from the benefits. It was asserted that exemptions from duties are strictly governed by valid notifications issued by the Central Government, and the exemption notification should be interpreted and administered accordingly.5. The Tribunal analyzed past legal precedents to determine the applicability of the exemption in the appellant's case. The decision in Commissioner, Customs & Central Excise v. JS Gupta & Sons was distinguished as it involved the denial of exemption despite eligibility, unlike the present case where the fundamental issue was the absence of exemption for trading units.6. The Tribunal also referred to the decision in Commissioner of Central Excise v. Blue Star Ltd, emphasizing that the liability to pay duty arises if the appellant was ineligible for procurement without duty payment. The Tribunal upheld the demand for duty based on the appellant's failure to comply with the conditions of the exemption notification and the bond obligations.7. Despite acknowledging the lack of mala fide intentions on the appellant's part and the confusion surrounding the continuity of benefits under the Letter of Permission, the Tribunal set aside the penalty but upheld the demand for duty amounting to Rs. 18,47,929.In conclusion, the Tribunal's judgment focused on the legal entitlement to duty exemptions for trading units under the EXIM Policy, emphasizing the importance of valid notifications and compliance with bond obligations in determining the liability for duty payments. The decision balanced the appellant's good faith actions with the legal framework governing central excise duties.
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