TaxTMI 
TaxTMI 
2017 (10) TMI 441
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....e finished products in the local domestic market called as Domestic Tariff Area (DTA) subject to two conditions namely (i) upon fulfilling the export obligation (ii) with the permission of the Development Commissioner, Madras Export Processing Zone (MEPZ). 3. The petitioner applied to the Development Commissioner, MEPZ on 10.1.1998 and 01.2.1999 seeking permission for effecting DTA sales. The Development Commissioner, after verifying the documents submitted by the petitioner, granted permission for the DTA sales for a total value of Rs. 204.34 lakhs on the total ex-factory value of production of Rs. 552.59 lakhs for the year 1997-98. 4. Referring to Notification No.2/95-CE dated 04.1.1995, as amended, it is submitted that the finished products produced in a 100% EOU, when sold in India as the DTA sales, the duty amount payable is 50% of the customs duty including other duties like SCD and ACD respectively. The petitioner is stated to have paid a total sum of Rs. 74,35,252/- in terms of Notification No.2/95. The petitioner would state that they are not liable to pay SCD and ACD, which amount to Rs. 41,58,997/-. It is the claim of the petitioner that the said amount is li....
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.... 'allowed to be sold' in Clause (ii) of Proviso to Section 3(1) of the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act) are very important and relevant. After taking that aspect into account, the petitioner paid appropriate duty on the DTA sales on the goods allowed to be sold and consequently, there cannot be a further levy. Therefore, the notice goes contrary to the charging provision viz. Section 3 of the Act as applicable to 100% EOU. 8. It is further submitted by the learned counsel for the petitioner that the respondent, without taking any steps to set aside the Letter of Permission (LoP) issued by the Development Commissioner, MEPZ, cannot demand any amount as duty, as he cannot sit as an Appellate Authority over the decision of the Development Commissioner. The Central Board of Excise and Customs (CBEC), New Delhi, in their circular No.618/9/2002 - ex - dated 13.2.2002, clarified that prior to 11.5.2001, the clearance from the EOU, if not allowed to be sold in India, shall continue to be chargeable to duty under Section 3(1) of the Act. According to him, in the present case, if the permission granted by the Development Commissioner, MEPZ, is....
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.... his contention, the learned Senior Panel Counsel placed reliance on the decisions of the Hon'ble Supreme Court in the cases of (i) Special Director Vs. Mohd. Ghulam Ghouse [reported in 2004 (3) SCC 440]; and (ii) Union of India Vs. Kunisetty Satyanarayana [reported in 2006 (12) SCC 28]. Hence, it is submitted by the learned Senior Panel Counsel appearing for the respondent that the petitioner should be directed to submit their reply to the show cause notice and that the matter should be left to be adjudicated by the respondent. 13. Heard the learned counsel for the parties and perused the materials placed on record. In the preceding paragraphs, the grounds, based on which, the petitioner seeks a Writ of Prohibition, have been summarized. Essentially, the petitioner would contend that the impugned show cause notice cannot be allowed to be proceeded further and the difference of levy on goods manufactured in a case of 100% EOU and that of the levy of goods manufactured and cleared by any other unit is significant, as, in the case of 100% EOU, it is on the goods allowed to be cleared and sold in India whereas in other cases, the levy is on the goods manufactured and r....
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....legal position or for that matter the effect of Exemption Notification cannot be applied in the abstract, but are required to be applied to the facts and circumstances of each case. Therefore, however strong the case of the petitioner would be on legal grounds, while examining the applicability of the same, it is essential and necessary to go into the factual matrix. 19. In the show cause notice, the allegation is that the details furnished by the petitioner to the Development Commissioner, MEPZ vide letters dated 10.1.1998 and 01.2.1999 indicate that the petitioner had deducted Rs. 53,04,928/- from the consumption of imported raw materials and thereby reduced the value of consumption of imported raw materials and consequently, the value addition achieved has been boosted to 30.6% as detailed in Annexure I to the show cause notice. It is further alleged that the petitioner thereby got permission from the MEPZ to clear 40% of value of production in the DTA at concessional rate of duty under Notification No.2/95 dated 04.1.1995. 20. Referring to the formula for calculating Net Foreign Exchange Profit (NFEP), it is stated that the formula is A - B/A X 100, in which, 'A' ....
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....Rules also stands attracted in as much as the petitioner claimed ineligible exemptions under Notification No. 2/95 for clearance of goods to the DTA. 23. Thus, it is stated that since the petitioner had indulged in wilful mis-statement of relevant facts with an apparent intention to evade payment of duty, the Proviso to Sub-Section (1) of Section 11A of the Act is applicable. Apart from that, there is also a proposal to levy penalty under Rule 173Q of the Rules and Sections 11AC read with 38A of the Act and a liability to pay interest under Section 11AB(1) of the Act. 24. The petitioner's case largely rests upon the decisions, which were cited by the learned counsel. The earliest of such decision being SIV Industries Ltd., and the latest being Sarla Performance Fibers Ltd. One common feature in all these decisions is that the matter has travelled upto the Hon'ble Supreme Court after exhausting all the remedies available under the Act. In other words, the show cause notice was adjudicated upon and an Order-in-Original was passed, which was challenged before the Tribunal and against the decision of the Tribunal, as the matter pertains to valuation, an appeal was filed b....
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....fringe the right of anyone. Writ jurisdiction is a discretionary jurisdiction and hence, such discretion under Article 226 of The Constitution of India should not, ordinarily, be exercised by quashing a show cause notice. In some very rare and exceptional cases, the High Court can quash a show cause notice if it is found to be wholly without jurisdiction or for some other reason, if it is wholly illegal. However ordinarily, the High Court should not interfere in such a matter. 28. Bearing in mind the above legal principle, if the case on hand is examined, the allegation against the petitioner being one of irregularity in the availment of concession under the DTA sales furnishing inflated export sales, is purely a factual issue, which has to be agitated by the petitioner before the Adjudicating Authority. Whether or not there has been inflation and whether the respondent was justified in arriving at the actual NFEP at 3.95% is correct or otherwise, has to be thrashed out before the Adjudicating Authority. After the factual scenario becomes clear, then only a situation arises for applying the legal principle. This Court would not have been wholly justified to examine the four deci....