TaxTMI 
TaxTMI 
2010 (6) TMI 686
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.... procured and imported consumables to VGPL and had also wrongly availed the exemption on capital goods, machinery, spares, components and consumables admissible to EOUs engaged in production and export of granite articles. After due process, the Commissioner passed the impugned order wherein he demanded the following amounts along with applicable interest and imposed equal amount of penalty under the provisions of the Central Excise Act and the Customs Act on the assessee. (i) Central Excise duty of Rs. 40,89,824/- (Rupees Forty lakhs eighty nine thousand eight hundred and twenty four only) payable on the finished goods manufactured and cleared clandestinely by MGPL to DTA. (ii) Central Excise duty of Rs. 3,78,101/- (Rupees Three lakhs seventy eight thousand one hundred and one only) on unpolished sawn slabs manufactured and cleared clandestinely. (iii) Customs duty of Rs. 2,06,627/- (Rupees Two lakhs six thousand six hundred and twenty seven only) on the imported consumables cleared to VGPL. (iv) Central Excise duty of Rs. 3,99,644/- (Rupees Three lakhs ninety nine thousand six hundred and forty fo....
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....over the exemption availed on the capital goods, spares, consumables etc. The demand was thus contrary to CBEC Circular No. 21/95-Cus., dated 10-3-1995. They had fulfilled condition No. 4 of Notification No. 37/2000-C.E. This condition required the assessee to use the machinery in connection with the operations of the EOU, that the capital goods were installed within one year of import/procurement and that the EOU should achieve NFPP and EP. They had satisfied these conditions. The condition No. 12 was a procedural condition. The demands were barred by limitation as the authorities were aware of the fact that dressed granite blocks were being produced and exported. 2.1 Demands under various other heads were also contested. 3 During hearing the learned Sr. Counsel for the appellants submitted that the EOU has achieved NFEP and fulfilled export obligations prescribed. It is submitted that the demand towards exemption availed on machinery, component parts and consumables etc imported and indigenously procured was confirmed on the ground that the appellant had failed to fulfill Condition No. 12 of Notification No. 37/2000-C.E. as amended by Notification No. 22/2003-C.E. and ....
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.... in computation of the demand under this head. We find that where the claim could be satisfactorily established, the Commissioner allowed relief. He rejected the claim by the appellants that the value adopted for computation of duty was much higher than the relevant value. It was claimed before him that the goods involved were rejects and the sale price adopted was high. The Commissioner found that the appellants could not show any record to find that the impugned goods were reject slabs. We find that the Exim policy provides for the manner in which rejects are to be treated for the purpose of payment of duty. The EOU is required to intimate the authorities about generation of rejects. There are restrictions as regards rejects that could be allowed to be cleared by the EOU to DTA and the duty payable on the same. In the instant case, the appellants never informed the department about generation of rejects or their clearances. In the circumstances, we find that the Commissioner's finding that what was cleared by the appellant was not rejects but finished goods cannot be interfered with. In arriving at the finding that the EOU had cleared sound goods and not rejects, he had relied on....
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....counted clearances of diamond wire on 1-6-2003 and 19-6-2003 in its records recovered as follows :- 1-6-2003 Diamond Wire (SEA) 22 mtrs VGPL 19-6-2003 Diamond Wire (SHINHAN) 100 mtrs Cheemakurthy Used Diamond Wire (SHINHAN) 25 mtrs -d- Relying on the assessee's own records, the Commissioner found that the impugned clearance of diamond wire involved new diamond wire and not used diamond wire. Its records showed used diamond wire as 'used diamond wire'. Accordingly, he confirmed the demand of duty on diamond wire as proposed in the show cause notice. In the absence of contrary evidence, we find that the Commissioner's finding is sound. We sustain demand of Rs. 2,06,627/- under this head. 5.4 As regards the demand of exemption availed on indigenous consumables (Rs. 3,99,644/-) found to have been transferred to VGPL, the contention raised by the appellants has been that they had purchased such goods on account of VGPL. We find that the Commissioner rightly found that the EOU was not supposed to procure goods on behalf of a DTA unit and that it was liable to pay the exemption availed on indigenous consumables procured and transferred to VGPL. ....
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....ed the conditions of the notifications Nos. 37/2000-C.E. dated. 8-5-2000 as amended by 22/2003-C.E., dated 31-3-2003, as detailed in Annexure-C3 of the notification from MGPL under the provisions of Sec. 11A of the Central Excise Act, 1944 ; iii. Customs duty amounting to Rs. 2,79,38,505/- (Rupees two crore seventy nine lakh thirty eight thousand five hundred and five only) on the imported capital goods utilized at quarries in as much as they have violated the conditions of the Notifications No. 52/2003-Cus., dated. 31-3-2003, as detailed in Annexure C2 of the notice from MGPL under the provisions of Section 28 of the Customs Act, 1962. iv. Customs duty amounting to Rs. 1,39,95,520/- (Rupees one crore thirty nine lakh ninety five thousand five hundred and twenty only) on the imported consumables utilized at quarries in as much as they have violated the conditions of the Notification No. 52/2003-Cus., dated 31-3-2003, as detailed in Annexure C4 of the notice from MGPL under the provisions of Section 28 of the Customs Act, 1962. 6.1 Equal amounts of penalty as the duty demanded have also been imposed on the appellants unde....
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....ite blocks at their quarries. MGPL had failed to establish with evidence that the impugned machinery, spares etc. had not been used in excavation of the granite blocks exported or sold in DTA. 9 Citing case laws, MGPL had argued that notification had to be understood by the plain words used and no intendment could be ascribed to the words of the notification. The authorities had interpreted the notification in such a manner that even if a procedural condition was violated substantial liability towards duty on the machinery could be fastened on the assessee. In this connection, the Commissioner found that the assessee had failed to fulfil the following conditions of the Notification No. 37/2000-C.E. dated 8-5-2000. "3 The goods (capital goods & consumables) are used by the unit for the purpose of quarrying of granite meant for further processing or manufacture or production of articles of granite for export by its own EOU or its unit in the zone." "12 The goods so quarried shall be removed from the quarry site only for supply to unit's own processing unit in the zone or Export-Oriented Unit or for supply to an other hundred percent Export- Oriented Unit or the units in the ....
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....C. 12 As regards the demand relating to capital goods and consumables used at the quarries of the appellant in the production of granite blocks exported directly from quarries as such or sold in DTA, the main argument against the demand is that the quarried boulders were not exported 'as such' from the quarries. They were exported directly after a process of manufacture. It is claimed that the granite blocks exported were classifiable under chapter heading 6802. It is argued that the heading covered roughly sawn blocks and stone of any shape including blocks or shapes or sheets whether or not in form of finished articles. We find that the impugned order did not confirm the demand for the sole reason that the EOU had exported excavated granite blocks 'as such' from the quarries. He found that the impugned goods were not covered by the LOP issued to the EOU. Therefore, the exports could not be treated to be under the EOU scheme. The DC had categorically clarified that these exports had not been counted for fulfilment of export obligations. 13 We reproduce the Notification No. 37/2000-C.E. dated 8-5-2000, as under :- Exemption to specified goods for use in a granite quarry by....
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....fied by the Assistant Commissioner of Customs or Central Excise or Deputy Commissioner of Customs or Central Excise, binding itself :- (a) to use the said goods only for its own export oriented unit or its unit in the zone, as the case may be ; (b) to fulfil the export obligation and Net Foreign Exchange Earning as a Percentage of Export and comply with conditions stipulated in this notification and the Export and Import Policy ; (c) to pay on demand an amount equal to the duty as leviable on the goods and interest at the rate of 20% per annum on the said duty from the date of duty free procurement of the said goods till the date of payment of such duty, if - (i) in the case of capital goods, such goods are not proved to the satisfaction of the Assistant Commissioner of Customs or Central Excise or Deputy Commissioner of Customs or Central Excise to have been installed or otherwise used within a period of one year from the date of procurement thereof or within such extended period not exceeding five years as the Assistant Commissioner of Customs or Central Excise or Deputy Co....
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....The unit follows the procedure contained in the Chapter X of the Central Excise Rules, 1944 with the modification that the certificate in form CT-3 as specified in Annexure II to this notification shall be used by the Customs or Central Excise Officer-In-charge of the unit in place of the certificate in form CT-2 provided in the said Central Excise Rules. (8) The quarries are in the name of the unit either on 'lease-basis' or on 'ownership basis'. The location and area of quarries or any subsequent change in location of quarry or quarries at a later stage, shall be intimated by the unit to the Development Commissioner and the Assistant Commissioner of Customs or Central Excise or Deputy Commissioner of Customs or Central Excise. (9) The Assistant Commissioner of Customs or Central Excise or Deputy Commissioner of Customs or Central Excise may, subject to such conditions and limitations as he may specify and subject to the provisions of the Export and Import Policy, allow - (a) the unit to supply granite so quarried to other Export Oriented Units or units in the Zone without payment of duty; (b) the said goods to ....
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....d by clause (a) shall be allowed for the period from the date of their use in a quarry to the date of payment of duty. Note : For the purpose of this notification Export and Import Policy means the Export and Import Policy, 1997-2002 published by the Government of India under the Ministry of Commerce, Notification No. 1(RE-99)/1997-2002, dated 31st March, 2000, as amended from time to time. TABLE 1. Hydraulic Excavators 2. Pneumatic Compressors 3. Jack Hammers 4. Hydraulic Drilling Machines 5. Line Drillers 6. Front End Loaders 7. Pneumatic Grinders 8. Diamond Wire Saws 9. Dressing Machine 10. Core Drilling Machine 11. Jet Burners 12. Cranes 13. Derricks 14. Tippers and Dumpers 15. Welding Machine 16. Generating sets 17. Steel Chains and Steel Ropes 18. D-Shackles 19. Diamond Wires 20. Diamond Segments 21. Tungsten Carbon Drill Rods 22. Steel Feathers & Wedges 23. Burner Nozzle 24. Welding Rods 25. Hydraulic Oil and Lubricants 26. Explosives 27. Chisels, Hammers, Chain Pulley Blocks 28. Steel Pillow Kits 29.....
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....ces under which you have exported the Granite Blocks directly from the quarries without bringing the same to the EOU's premises at Khammom which is in opposite direction to the Port of Chennai has been noted. But, export of Dimensional Granite Blocks under EOU scheme was not permitted earlier to your EOU. Hence, usage of duty-free capital goods and consumables for excavation of the Granite Blocks from the quarries for direct export is in contravention of the Foreign Trade Policy and relevant Customs & Central Excise notifications. However, in view of the permission now granted vide this office letter dated 4-5-2005 under broad-bonding far export of cut & dressed dimensional Granite Blocks also under EOU scheme and keeping in view of the fact that you have exported the entire quantity or granite Blocks physically and have earned foreign exchange for a substantial value of Rs. 100 crores towards such exports, as stated, you may approach the Customs and Central Excise Authorities concerned duly furnishing the facts and records of such exports affected, though the name was not counted under EOU scheme; for consideration of your case liberally for the deviation of the provisions of t....
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....d by the appellants before us, excluding the impugned exports, within the time prescribed or allowed, the benefit of notifications denied as per the impugned order would still be available to the assessee. The impugned demands are set aside. 18 As regards the clearances to DTA of the finished goods/export products of the EOU, the appellants have sought exemption in terms of Notification Nos. 8/97-C.E. and 2/95-C.E. They have relied on the decision of the Tribunal in the case of CCE, Jaipur-II v. Modern Polyster Yarn [2002 (149) E.L.T. 377 (Tri.-Del.)], wherein it was decided that respondents therein were entitled to benefit of Notification No. 8/97-C.E. as well as 2/95-C.E. though it had not fulfilled the condition of seeking approval for DTA sale from the competent authority. We find that in the case of Euro Cotspin Ltd. v. CCE, Chandigarh reported at 2001 (127) E.L.T. 52 (Tri.-Del.), this Tribunal held as follows in a case of clandestine removal of finished goods to DTA. "9 Section 3 of the Central Excise Act relates to levy of Central Excise Duty. sub-section (1) of the Section 3 stipulates that all excisable goods which are produced or manufactured in India shall be subje....