TaxTMI 
TaxTMI 
2010 (4) TMI 662
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....r Chapter Heading 39.26. They were also licensed as a private warehouse under Section 58 of the Customs Act w.e.f. 8-10-1996 and under Rule 174 of Central Excise Rules, 1944 w.e.f. 20-5-97. (b) The appellant company vide their letter dated 14-7-97 informed the Assistant Commissioner that they wanted to operate a DTA unit from a portion of the same premises (where they were operating the 100% EOU) for the manufacture of identical goods. The DTA unit was given Central Excise Registration No. 16/CH-39/BHD.III/97 dated 26-8-97. The domestic unit was availing full exemption in respect of the PET bottles said to have been manufactured by them in terms of Notification No. 1/97-C.E., dated 1-3-1997 and were not taking Modvat credit of duty paid on the resin, as not taking Modvat credit of duty paid on the inputs was one of the conditions for availing the benefit of the said notification. (c) The appellant company imported a SIPA - Top-2000 machine (Bi-Oriented Stretch Blow Moulding Machine) with moulds and other parts without payment of customs duty in terms of Notification No. 13/81-Customs dated 9-2-1981 for use by the 100% EOU. (d....
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....d penalty of equal amount on the appellant company, under Section 11AC of the Act, but refrained from imposing penalty on the appellant company under Rule 173Q and 209 of the Rules; imposed penalties of Rs. 5 lakhs on Sanjeev Malik and Rs. 1 lakh on Rajeev Malik under Rule 209A of the Rules. He also confiscated the unaccounted bottles and resin. He also revoked C.Ex. registration of the domestic unit. 4. The learned Advocate for the appellants made the following submissions : (a) The appellant company is not challenging the confiscation of unaccounted PET bottles and resin. (b) Revocation of C. Ex. Registration is too harsh a punishment and not justified in the facts and circumstances of the case and may, therefore, be set aside. CESTAT in its first final order dated 20-3-2001 allowed manufacture and sale of goods from domestic unit thereby setting aside the revocation of licenses. (c) Interest under Section 11AB of the Act, is not leviable in view of the provisions of sub-section (2) as the duty was payable at the time of alleged removals during 1997 and 1998 which were prior to 11-5-2001. Re....
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....oods alleged to have been manufactured in EOU, but out of the inputs procured in the name of DTA unit and cleared into DTA, the Appellant would be eligible for Modvat credit of duty on the inputs. 5. Learned SDR made the following submissions : (a) The EXIM policy or the Notification do not provide for situations of clandestine removal. (b) The appellant company has not claimed and availed the benefit of Notification 8/1997-C.E., dated 1-3-97. The words used in the notification "allowed to be sold" should be read as allowed as per the EXIM policy. 6. We have carefully considered the submissions from both sides. The investigation in this case confirmed that the appellant was having a 100% EOU; the appellant procured goods duty free under Notification 13/81-Cus., dated 9-2-81 and Notification 1/95-C.E., dated 4-1-95; the appellant sought for artificially carving out a DTA unit within the premises of 100% EOU; surprisingly, the department has given Central Excise registration for the said DTA unit; the appellant has shown paper transactions as if they procured raw materials in the name of DTA unit, produced finish....
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....ecified under sub-rule (11) of the said Rule. (f) Whether penalties are to be sustained on the appellants and if so, to what extent. 8. It is appropriate to note one of the fundamental differences in respect of clearances by a 100% EOU and DTA units. There is no restriction on any normal DTA units on the quantum of their clearances either for domestic consumption or for export. On the other hand, the 100% EOU is basically required to export its production and in view of such obligation they are extended many benefits. There are therefore quantitative restrictions on clearances they can effect to the domestic market. They are permitted by the Development Commissioner, only to a limited extent clearances to the DTA depending upon their export performance. Any clearances made to DTA by a 100% EOU, against the terms of the permission of the Development Commissioner are offending in nature for which the Development Commissioner can take action for violation of the provisions of EXIM policy. 8.1 While the duty on the excisable goods manufactured and cleared by DTA units is levied under Section 3(1) of the Central Excise Act, 1944 at the ....
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....er issues." The implication of the above decision is that the rate of duty applicable to goods cleared from any 100% EOU is the same irrespective of whether the clearances are covered by the permission by the Development Commissioner or not and the same is as per the proviso to Section 3(1) of the Central Excise Act, 1944. However, as discussed above, any exemption notification prescribing exemption to clearances up to the limit prescribed by the Development Commissioner has to be strictly allowed only up to the limit prescribed. It has also been submitted that the rate of duty even in respect of goods clandestinely removed shall be the effective rate after applying the exemption Notification as may be applicable and in this regard the decision of the Tribunal in the case of CCE, Jaipur-II v. Modern Polyster Yarn reported in 2002 (149) E.L.T. 377 (Tri. - Del.) has been cited wherein the Tribunal, relying on its earlier judgment in case of Euro Cotspin Ltd. v. CCE, Chandigarh reported in 2001 (127) E.L.T. 52 (T) has held that even clandestine clearances by a 100% EOU into DTA, if within the DTA entitlement, would be eligible for concessional rate of duty under Notification No. 2/....
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....duty Modvat credit) were not applicable to the excisable goods produced or manufactured by a 100% EOU. Therefore the Appellant's claim for Modvat credit has to be rejected. 9. Next comes the question as to whether while quantifying the duty demand the price realised by the Appellant from the customers is to be treated as cum duty price and duty is to be calculated on the assessable value determined on this basis. The Appellant in support of this plea have relied upon Hon'ble Supreme Court's judgments in cases of Collector v. Shri Chakra Tyres Ltd. (supra) and CCE, Delhi v. Maruti Udyog Ltd. (supra). 9.1  Here are three types of clearances without payment of duty in respect of which duty has been demanded - (a) Clandestine clearances by the EOU without payment of duty and without issue of invoices; (b) Clearances by the EOU without payment of duty under parallel invoices. (c) Clearances made under the invoice of DTA unit at nil rate of duty by fraudulently availing the exemption full duty under notification available to DTA units, while the goods had actually been manufacture in the EO....
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....s as under : "The provisions of sub-section (1) shall not apply to cases where the duty becomes payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President." The above decision is also sought to be supported by the decisions of CESTAT in cases of Southern Power Equipment (P) Ltd. [2009 (91) RLT 245] and Ajanta Tubes Ltd. - 2006 (75) RLT 475. 10.1 Section 11AB was introduced with effect from 28-9-96 providing for recovery of interest on duty which was not paid, or short paid or erroneously refunded, "from the first day of the month succeeding the month in which the duty ought to have been paid". However, this provision was limited to cases of demand arising due to "by reason of fraud, collusion, or any wilful mis-statement or suppression facts with intent to evade payment of duty". The amendment with effect from 11-5-2001 enlarged the scope of coverage of cases relating to recovery of interest to all cases of demand "from the first day of the month succeeding the month in which the duty ought to have been paid". The amendment did not wipe out the existing liability to pay interest in respect cases involving "....