2019 (3) TMI 611 - AT - Central Excise

Partial success for EOU appeal on duty-free imports for manufacturing, remand for re-calculation

M/s. Gem Granites Versus The Commissioner of G.S.T. & Central Excise, Chennai South Commissionerate

The Tribunal partially allowed the appeal by a 100% Export Oriented Unit (EOU) concerning the use of duty-free imported raw materials in manufacturing. ... 100% EOU - Use of duty-free imported raw materials in the manufacture of finished goods, namely, granite slabs - denial of the duty-free benefit of Sl. No. 3A of Notification No. 23/2003 - subsequent SCN - extended period of limitation - Held that:- There are merits in the plea on limitation taken by the appellant. Evidently, the Show Cause Notice is a periodical one and, as conceded by the adjudicating authority in paragraph 19, the very identical issue in another set of proceedings for an earlier period from March 2004 to November 2008 had been adjudicated vide Order dated 30.03.2012. This being so, the subsequent Show Cause Notices cannot invoke the extended period of limitation. In the circumstances, the impugned Order affirming the demand for the period from 01.12.2008 to 31.10.2011, initiated by the Show Cause Notice dated 19.07.2012, can be sustained only for the normal period of limitation, to be calculated backwards from the date of issue of the Notice. For this, the demand for the remaining portion will consequentially be set aside - For the limited purpose of re-calculating the duty liability for the normal period of limitation, the matter is remanded to the adjudicating authority. Appeal allowed by way of remand. Issues:1. Allegation of using duty-free imported raw materials in the manufacture of finished goods2. Denial of duty-free benefit under Notification No. 23/20033. Demand of duty liability with interest and enforcement of B-17 Bond4. Imposition of penalty under Section 11AC of the Central Excise Act, 19445. Allegation of breach of condition under Sl. No. 3A of the Notification6. Plea for limitation based on previous adjudication7. Calculation of differential duty including Education Cess and SHE Cess8. Evidentiary value of affidavit submitted by the appellant9. Applicability of normal period of limitation for Show Cause Notices10. Remand for re-calculation of duty liability and exclusion of 'third-time cess'Analysis:1. The appellant, a 100% Export Oriented Unit (EOU), faced allegations of using duty-free imported raw materials like rough granite blocks in the manufacture of finished goods, granite slabs. The Show Cause Notice proposed denial of duty-free benefit under Notification No. 23/2003, demand of duty liability, and enforcement of the B-17 Bond.2. The Commissioner confirmed the duty demand with interest and ordered enforcement of the bond but did not impose a penalty under Section 11AC. The appellant contended that the imported raw materials were used for goods not cleared in the Domestic Tariff Area (DTA) but exported or supplied to other EOUs.3. The appellant argued that the proceedings were hit by limitation, citing a previous adjudication. The appellant also challenged the calculation of differential duty, including Education Cess and SHE Cess, which they claimed should not be levied multiple times.4. The respondent opposed the appeal, highlighting the lack of proof from the appellant regarding the clearance of imported granite blocks to the DTA. The respondent questioned the evidentiary value of an affidavit submitted by the appellant without supporting evidence.5. The Tribunal found that the duty-free exemption was subject to conditions, including the goods being produced or manufactured in India for clearance to DTA. The lack of evidence from the appellant to counter the breach of this condition weakened their case.6. While the appeal did not succeed on merits, the Tribunal acknowledged the appellant's plea on limitation based on a previous adjudication. It held that subsequent Show Cause Notices could not invoke an extended period of limitation beyond what was legally permissible.7. The Tribunal remanded the matter to the adjudicating authority for re-calculation of duty liability within the normal period of limitation. It directed the exclusion of the 'third-time cess' as per the law cited by the appellant's advocate.8. Ultimately, the appeal was partly allowed for remand, with consequential benefits to be determined as per the law. The Tribunal's decision was based on a detailed analysis of the issues raised by both parties and relevant legal precedents.