TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 485
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....he country (Domestic Tariff Area) subject to conditions as specified from time to time. As EOUs are practically duty-free, they are also treated as if they are outside India. Therefore, in respect of any goods which are cleared by the EOU for sale within India, excise duty is collected at a rate equivalent to Customs duty leviable on identical goods imported into India in terms of the proviso to section 3 of Central Excise Act, 1944. 3. In this case, the appellant had imported inputs claiming the benefit of exemption notification No.52/2003-CUS dt.31.03.2003 for Basic Customs Duty and applicable Central Excise Duty (on indigenously procured raw materials). They were supposed to manufacture solar modules and export. However, the appellant was not able to export goods and had cleared their final products in DTA claiming exemption under notification Nos.24/2005-CUS as amended by notification No.132/2006-CUS and notification No.06/2006-CE and notification No.12/2012-CE. Final products manufactured by the appellant have zero basic customs duty because they appear in List-5 of notification No.06/2006-CUS dt.01.03.2006 and at Sl.No.332 of notification No.12/2012-CE dt.17.03.2012. In othe....
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....re, no duty was paid on the final products cleared by the appellant to the DTA. There is no dispute regarding the eligibility of the exemption notification for their final products. 5. What is in dispute is whether the appellant is also entitled to duty-free inputs (both imported and indigenous) under the exemption notifications 52/2003-CUS dt.01.03.2003 and 22/2003-CE. 6. It is undisputed that the notification Nos.52/2003-CUS and 22/2003-CE are meant for exemption to 100% EOUs. It is also not in dispute that both these exemption notification are issued by the Finance Ministry in consonance with corresponding provisions of Foreign Trade Policy. Para 6 of notification No.22/2003-CE reads as follows: "6. Notwithstanding anything contained in this notification, the exemption contained herein shall also apply to the goods used for the purposes of processing, manufacture, production or packaging of articles in an user industry and such articles (including rejects, wastes, scrap and remnants arising out of such processing, manufacture, production, or packaging of such articles) even if not exported out of India are allowed to be cleared outside the user industry under and in accordan....
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....able thereon under section 3 of the Central Excise Act, 1944 ( 1 of 1944) or where such finished goods (including by-products, rejects, waste and scrap) or services are cleared to the warehouse appointed or registered under notification of the Government of India in the Ministry of Finance ( Department of Revenue) No. 26/98-Central Excise ( NT), dated the 15th July, 1998 or No. 46/2001-Central Excise ( NT), dated the 26th June, 2001 or cleared to the warehouse authorised to carry out manufacturing process or other operation under section 65 of the Customs Act, 1962 (52 of 1962) and under the Manufacture and Other Operations in Warehouse Regulation, or cleared to the holders of certificate from Apparel Export Promotion Council and Council for Leather Export for duty free imports as referred to in clause (e) of the paragraph 6.9 of the Export and Import Policy, without payment of duty. Provided that where such finished goods (including rejects, waste and scrap and remnants) are not excisable, customs duty equal in amount to that leviable on the inputs imported under this notification and used for the purpose of manufacture of such finished goods, which would have been paid bu....
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....9 1,61,64,228 2,39,29,577 2 33/Commr/Bol/14 dt.29.04.2014 71,19,907 1,22,95,842 1,94,15,749 3 06/Commr/Dgp/15 dt.29.01.2015 66,34,027 76,39,578 1,42,73,605 4 35/Commr/Dgp/15 dt.01.10.2015 1,37,80,071 2,63,08,348 4,00,88,419 TOTAL 3,52,99,354 6,24,07,996 9,77,07,350 11. Interest was also demanded on the aforesaid amounts and penalties were proposed to be imposed under section 11AC of Central Excise Act and Rule 25 of Central Excise Rules (CER), 2002. Penalty was also proposed to be imposed under section 112 of Customs Act, 1962. The appellant contested the demands and after following due process, the learned Commissioner, in the impugned order, held as follows: " In view of the discussions made hereinbefore, I pass the following order: i. I confirm the demand of Central Excise duty of an amount Rs. 3,52,99,354/- (Rupees Three Crore Fifty-two lakh Ninety-nine thousand Three hundred Fifty-four only) and order recovery of the same from M/s Sova Power Ltd., under proviso to erstwhile Section 11A(1) and Section 11A(10) of the Central Excise Act, 1944. ii. I impose interest at appropriate rate under provision of Section 11AA (Erstwhile Section 11AB) of Central E....
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....e of the SCN which only sought to deny the benefit of such exemption notifications which they were admittedly not entitled to. However, even if the submissions of learned counsel were accepted, the appellant was not entitled to the benefit of the other exemption notifications which they now claimed in respect of these inputs which they had procured. Therefore, he submits that this appeal needs to be rejected. 14. In this factual background, we proceed to examine the appellant's eligibility to exemption notifications which are now being sought. Notification No.24/2005-CUS reads as follows: " In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962(52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, herebyexempts the following goods, falling under the heading, sub-heading or tariff-item of the First Schedule to the CustomsTariff Act, 1975 (51 of 1975) and specified in column (2) of the Table below, when imported into India, from the wholeof the duty of customs leviable thereon under the said First Schedule, namely:- TABLE S.No. Goods falling under Heading, Sub-heading or Tariff item ....
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....eCentral Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary inthe public interest so to do, hereby exempts the excisable goods of the description specified in column (3)of the Table given below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or subheading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified Thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at therate specified in the corresponding entry in column (4) of the said Table and subject to the relevantconditions specified in the Annexure to this notification, and condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid: Provided that nothing contained in this notification shall apply to goods specified against S.No.10 of thesaid Table on or after the 1st day of May 2007. Explanation.-For the purposes of t....
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....edure set out in Customs (Import of goods at concessional rate of duty for manufacture of excisable goods) Rules, 1996. These rules require the claimant to obtain a registration from the department and also follow some procedures. However, they were already registered with the Central Excise department as an EOU. The CBEC had issued a clarification in DOF No.334/7/2017/TRU dt.01.02.2017. Para 6 of which interalia reads as follows: " ... EOUs will also be eligible to import or procure raw materials/ inputs at other concessional/ nil rate of BCD, excise duty/ CVD or SAD, as the case may be, provided they fulfil all conditions for being eligible to such concessional or nil rate of duty. For these purposes, if an EOU is already registered with the jurisdictional central excise authority, it will not be required to take any fresh registration under the Customs (Import of Goods at Concessional Rate of duty for manufacture of Excisable Goods and Other Goods) Rules, 2016, as the case may be." 18. Learned counsel would submit that although the clarification was issued by the CBEC in 2017, this should be applied to earlier periods also as it is only a question of technicality of being reg....
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....he manufacturer who intends to avail the benefit of an exemption notification; (d) "Jurisdictional Custom Officer" means an officer of Customs of a rank equivalent to the rank of Superintendent or an Appraiser exercising jurisdiction over the premises where either the imported goods shall be put to use for manufacture or for rendering output services; (e) "manufacture" means the processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term "manufacturer" shall be construed accordingly; (f) "output service" means supply of service with the use of the imported goods. 4. Information about intent to avail benefit of exemption notification.- An importer who intends to avail the benefit of an exemption notification shall provide the information to the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service, the particulars, namely:- (i) the name and address of the manufacturer; (ii) the goods produced at his manufactur....
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....e Custom Station of importation shall allow the benefit of the exemption notification to the importer who intends to avail the benefit of exemption notification. 6. Importer who intends to avail the benefit of an exemption notification to give information regarding receipt of imported goods and maintain records. - (1) The importer who intends to avail the benefit of an exemption notification shall provide the information of the receipt of the imported goods in his premises where goods shall be put to use for manufacture, within two days (excluding holidays, if any) of such receipt to the jurisdictional Customs Officer. (2) The importer who has availed the benefit of an exemption notification shall maintain an account in such manner so as to clearly indicate the quantity and value of goods imported, the quantity of imported goods consumed in accordance with provisions of the exemption notification, the quantity of goods re-exported, if any, under rule 7 and the quantity remaining in stock, bill of entry wise and shall produce the said account as and when required by the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction....
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....he concerned exemption notification or take action by re-export or clearance of unutilised or defective goods under rule 7 and in the event of any failure, the Deputy Commissioner of Customs or, as the case may be, Assistant Commissioner of Customs having jurisdiction over the premises where the imported goods shall be put to use for manufacture of goods or for rendering output service shall take action by invoking the Bond to initiate the recovery proceedings of the amount equal to the difference between the duty leviable on such goods but for the exemption and that already paid, if any, at the time of importation, along with interest, at the rate fixed by notification issued under section 28AA of the Act, for the period starting from the date of importation of the goods on which the exemption was availed and ending with the date of actual payment of the entire amount of the difference of duty that he is liable to pay. 8. References in any rule, notification, circular, instruction, standing order, trade notice or other order pursuance to the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules,1996 and any provision thereof or to the Cu....
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....xemption notification undoubtedly exempts the final products of the appellant being covered at Sl.No.84 of the table read with Sl.No.11 of List-5. In fact they have also availed benefit of exemption notification. As far as Sl.No.21 of List-5 is concerned, it is very specific that it exempts parts consumed within the factory of production of such parts. It does not exempt parts which are sold outside the factory. There is no dispute that the parts have not been manufactured by the appellant. In fact, there is no demand on any parts manufactured by the appellant and used within the factory of the manufacture. The demand is on account of the parts which are either been purchased by them from other suppliers or parts which have been imported by them. In either case, they are clearly not covered by Sl.No.21 of List-5. Therefore, the appellant is not entitled to the benefits of this exemption notification as well. 23. In conclusion, learned counsel for the appellant submits that since they are entitled to the benefit of the aforesaid notification i.e., 24/2005- CUS, as amended by notification 132/2006-CUS dt.30.12.2006 and notification 06/2006-CE, regardless of the fact that the parts w....
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....oms duty and additional duty of customs". 26. It is not in dispute that the final products manufactured and cleared by the appellant are exempted from both the basic customs duty and additional duty of customs. Therefore, they are non-excisable and inputs used in their manufacture are clearly not covered by the exemption notifications originally claimed by the appellant andwhich were sought to be denied in the SCNs. Hence the demands on this ground must sustain. 27. The argument before us by the learned counsel is that even if their inputs are not covered by exemption notifications which they claimed and which are disputed in the SCN, they are covered by other exemption notifications. Therefore, no demand can be sustained against them. Learned DR argues that in the first place this amounts to going beyond the scope of the SCN. He also argues that they are otherwise also not entitled to the benefit of these exemption notifications. It is true that once an SCN is issued, the demand cannot go beyond the scope of the SCN nor can any penalties not proposed in the SCN be imposed. However, the noticee is not estopped from putting forth other grounds of defence and if he does so,fairness....
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.... Even if it is presumed that CBEC had such power, these letters are not subject to scrutiny and review by the Parliament. 29. Notwithstanding the above observations, we find that the exemption given by the CBEC by way of a letter was only to the extent of avoiding two registrations but no exemption has been given with respect to following remaining conditions of the Rules to be followed. In view of this, we find that the appellant is not entitled to benefit of the exemption notification 24/2005-CUS or 132/2006-CUS in respect of the inputs procured by them. 30. As far as the exemption notification 06/2006-CE dt.01.03.2006 is concerned, what is claimed is an exemption available for "parts consumed within the factory of production of such parts for manufacture of goods specified at Sl.No.1-20 above" (Sl.No.21, List-5 read with Sl.No.84 of the table). Clearly, there is no dispute with regard to the parts manufactured by the appellant and consumed within their factory. What is in dispute is that the parts which they have procured either by importing or from other indigenous suppliers, those are not consumed within the factory of production. There is no exemption for such parts. Theref....
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....y, with advantage, referred to another judgment of the Apex Court in the case of Amrit Foods v. Commissioner of Central Excise, U.P. - 2005 (190) E.L.T. 433 (S.C.). In that case, penalty was imposed under Rule 173Q of the Central Excise Rules, 1944 without mentioning that provision in the show cause notice. The said penalty was set aside and in the process, the Court made the following observations :- "5.The Revenue has preferred an appeal from the order of the Tribunal setting aside the imposition of penalty under Rule 173Q of the Central Excise Rules, 1944. The Tribunal has set aside the order of the Commissioner on the ground that neither the show cause notice nor the order of the Commissioner specified which particular clause of Rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of the 173Q. This not having been done the Tribunal's finding cannot be faulted. The appeal is, accordin....