TaxTMI 
TaxTMI 
2022 (5) TMI 1302
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....der the provisions of Section 11A (5) of Central Excise Act, 1944 read with Rule 14 of the CCR,2004 for contravention of proviso to Section 3(1) of the Central Excise Act, 1944 read with Para 6.18 of FTP. (ii) I appropriate the total amount of Rs.83,16,040/-(Eighty Three Lacs, Sixteen Thousand and Forty Only) already paid by the Noticee (Rs.65,05,647/- paid on De-bonding of due to valuation of WIP + Rs. 18,10,393/- paid on De-bonding due to valuation of Stock of Finished goods as against the total duty of Rs. 1,56,55,368/-demanded in the subject SCN. (iii) I order recovery of interest as applicable on the total differential amount of duty Rs.73,39,328/-payable and stand confirmed as at (i) above under the provisions of Rule 14 of the CCR, 2004, read with Section 11AA of the Central Excise Act, 1944; (iv) I impose a penalty of Rs.73,39,528/-(Rupees Seventy three Lacs Thirty Nine Thousand Three Hundred and Twenty Eight Only)on the Noticee under Rule 15(2) of the CCR, 2004, read with Section 11AC of the Central Excise Act, 1944. (v) I also give an option to the Noticee, under the second proviso to Section TTACO the Finance Act, 1994, to pay penalty equi....
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....04-2013. It appeared that "This classification of WIP inventory as indigenous and imported was incorrect as Work in Progress was nothing but partially finished product. The provisions of S. No. 3 of Notification No.23/2003 CE dated 31-03-2013 (i.e. payment of duty equivalent to only Central Excise duty when finished goods are manufactured wholly out of indigenous raw materials) was applicable only to finished goods cleared under Para 6.8 of FTP. Since the de-bonding units paid duty under Para 6.18 of FTP, benefit of concessional duty under Para 6.8 cannot be applied to de-bonded units (iii) Thus Appellant had wrongly availed duty concessions vide Central Excise Notification No. 23/2003-CE dated 31st March 2003" read with Para 6.8 of FTP, since the de-bonding units pay duty under Para 6.18 of FTP; as per the proviso to Section 3(1) of the Central Excise Act, 1944. The Appellant had also contravened the provisions of Section 6.8 of FTP (as this was not available to a de-bonding unit; as the exit from EOU scheme was allowed under para 6.18). (iv) Thus there was a short levy of duty on De-bonding due to valuation of WIP (indigenous) of Rs.1,36,07,370/- (Rupees One Crore, ....
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.... 1% S & H Edu Cess 13,942 Sub Total 9,357,939 4% Additional Duty 374,317 Total Duty 1,810,393 4 Work in Process Imported Assessable Value 52,003,081 Basic Custom Duty 5,200,308 Sub Total 57,203,389 12% Excise Duty 6,864,407 Basic + CVD 12,064,715 2% Edu. Cess 241,294 1% S & H Edu Cess 120,647 Sub Total 64,429,737 4% Additional Duty 2,577,189 Total Duty 15,003,846 5 Work in Process Indigenous Assessable value 52,634,686 12% Excise Duty 6,316,162 2% Edu. Cess 126,323 1% S & H Edu Cess 63,162 Total Duty 6,505,647 4.3 After getting permission for "In-principle" exit of unit from the Development Commissioner, appellants approached the jurisdictional Central Excise Authorities for issuance of "No Dues Certificate". After consideration of the request and due verification jurisdictional assistant Commissioner issued the "No Dues Certificate to the appellant vide his letter dated 21st May 2013. The "No Dues Certificate" issued by the jurisdictional officer is as follows: "OFFICE OF THE ASSISTANT COMMISSIONER. CENTRAL EXCISE PUNE-IV DIVN. EXCISE BHAVAN, AKURDI, PUNE-411 044. F.NO. PIV/Tech (303)VVCL/UT-1/2013-14/1508A Akurdi, 21st May, 20....
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....Yours Sincerely, Sd/- 21/5/2013 ( B.S.CHAUHAN ) Assistant Commissioner, C.Ex.Pune IV Division Copy to: Supdt.,C.Ex., Thergaon Range w.r.t. his letter F.No.TR/VVCL//De-bonding/ 2012-13 dated 05.04.2013 and 16/05.2013 for information and to necessary action in respect of the de-bonding of capital goods against the above EPCG Licence and ensure the compliance of all rules and regulation and to debit the said EPCG Licence after verifying the quantity and description of the goods as per the said licence." 4.4 From the perusal of the information submitted by the appellant and the information as recorded in the no due certificate issued, it is quite evident that jurisdictional officers have after due verification arrived at similar assessable value for each category. The categories in respect of which the demand of duty has now been made are included in the no due certificate namely - "Work in Process - Indigenous", and "Finished Goods". 4.5 On the strength of the "No Dues Certificate", appellant approached the Development Commissioner, for getting Final Debonding Order". Development Commissioner has vide his letter dated 04.07.2013, issued the Final Debonding Orde....
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....8/2, Telco Road, Chinchwad, Pune, Maharashtra and any other permission granted to unit' under EQU Scheme is hereby cancelled with immediate effect. Sd/- (NPS Monga) Development Commissioner, SEEPZ SEZ. M/s Virgo Valves & Controls Ltd. S. No. 277, Village - Mann, Taluka- Mulshi, Dist.-Pune" 4.6 Thereafter appellant vide their letter dated 13/14.08.2013 approached the jurisdictional Assistant Commissioner for the release of the B-17 Bond executed by them. On the basis of the observation made by Customs Receipt Audit, vide their F No CRA/EOU-REV=2014/AM-16 dated 28.07.2014, correspondences and investigations were under taken against the appellant and the Show Cause Notice issued to them on 09.02.2016. 4.7 Commissioner has vide the impugned order confirmed the demand made by the Show Cause Notice dated 09.02.2016 stating as follows: "Whether it is correct to demand duty on the stock of materials in WIP treating the same as finished goods for demanding duty thereon. 11.05 In this regards it has been inter-alia stated by the Noticee that as none of the work in progress material shown in the stock as on the date of de-bonding has reached such a stag....
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....able. Though the said reference is in the context of Central Excise but in principle the clarification applies pari materia and hence, what can be demanded at best on the stock of work in progress material is only the duty foregone by the department on the raw material (imported and indigenous) at the time of its procurement from suppliers. Therefore, what could at best be payable and demanded is the Customs duty forgone on the imported material under Notification no. 52/2003-Cus and the Central Excise duty forgone on indigenous material under Notification No. 22/2003-CE and not Notification no. 23/2003-CE which is referred to by the department, since, the same is applicable only for clearance of finished goods. 11.08 It is observed that the Noticee Unit had in its stock, inter-alia WIP (World In Process) goods in addition to raw materials, capital goods and finished goods at the time of De- bonding of its 100%EOU.It is provided in Para 6.18 (b) that the assessee shall assess duty liability arising out of de-bonding and after paying applicable duties, it shall obtain "No dues certificate" from Customs and Central Excise authorities. Based on the "No dues certificate" issued....
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....ences in support of the same. But the Noticee stated that the duty so paid thereon was on higher side and hence they are entitled to refund to that extent. In this context it is observed that if there is excess payment then assessee is to prove their case and to follow procedures of claiming refund under the statute. If credit is admissible, then the assessee has to claim with supporting evidences before the Assistant Commissioner i/c of the manufacturing unit. Regarding the Noticee's claim of revenue neutrality in its case, it is observed that duty is required to be paid by the unit who is supposed to pay, so revenue neutrality has no ground for nonpayment of duty. The duty actually payable and paid in this regard is quantified as tabulated below; 1) DUTY ACTUALLY PAYABLE ON DE_BONDING Sr. No. Issue Amount (Rs.) 1 Issue WIP (Treated as finished goods) 5,26,34,686/- 2 BCD @ 7.5 % 39,47,601/- 3 Total 5,65,82,287/- 4 CVD @ 12% on Rs.5,65,82,287/- (1+2) 67,89,874/- 5 Edu. Cess @3% of Rs.1,07,37,475/- (BCD + CVD) 3,22,124/- 6 Total 6,36,94,285/- 7 SAD @ 4% on (Rs. 6,36,94,285/-) 25,47,771/- Total duty (2+4+5+7) 1,36,07,3....
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....e Central Excise law for the purpose of clearance of goods from EOU to DTA or vice versa, they are to be treated as two different entities and payment of duty is regulated in such a manner. When, there is clearance from EOU to DTA, there is a transfer of possession of goods from one to the other and there are book entries passed for recovery of money from one to the other. Hence, it is their submission that till such time all the goods held in stock are cleared from 100% EOU to DTA, these are independent clearances from one entity to another entity and therefore are to be regarded as clearances to a DTA unit. Further, the DTA unit may be belonging to the same company, yet when it comes to clearances from 100% EOU to DTA unit, all the restriction and conditions which are applicable when such goods are sold from 100% EOU to a third party DTA unit, will be equally applicable for clearances from 100% EOU to DTA unit of the same company. Therefore, it is incorrect in law to hold that 100% EOU unit in the instant case, has not effected DTA sale to their unit located in a DTA area. 11.12 The word "Domestic Tariff Area" has been defined in FTP Policy at Para 9.16, the word "Sale" h....
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....ce to accommodate such incorrect procedure of duty calculation resulting in the short-payment of total duty of Rs. 1,56,55,368/- as on 30.04.2013 [Rs. 1,36,07,370/- being the short levy of duty on De- bonding due to valuation of WIP + Rs. 20,47,998/- being the short levy of Duty on De-bonding due to valuation of Stock of Finished goods). Therefore, it appears that the Noticee have wrongly availed duty concessions vide Central Excise Notification No. 23/2003-CE dated 31 March 2003" read with Para 6.8 of FTP, since the de-bonding units pay duty under Para 6.18 of FTP. as per proviso to Section 3(1) of the Central Excise Act, 1944. The Noticee has also contravened the provisions of Section 6.8 of FTP (as this is not available to a de-bonding unit, as the exit form EOU scheme is allowed under para 6.18). This has resulted in Short-levy of duty / under assessment of duty involving total duty of Rs. 1,56,55,368/- as on 30.04.2013. (ii) It is also observed that its WIP goods were being manufactured using both indigenous and imported raw materials. Therefore it was obvious that the subject WIP goods had come into existence by consumption of both indigenously procured and imported r....
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.... 15(2) of the CCR, 2004, read with Section 11AC of the Central Excise Act, 1944 is liable to be confirmed. (iv) Reliance is placed on the judgement of the Hon'ble Supreme Court in the case of UOI Vs. Dharmendra Textile Processors (2008-TIOL-192-SC-LB), while holding that mens-rea is not an essential element for imposing penalty for breach o obligations, has also observed that "It is delinquency of the defaulter itself which establishes his blameworthy conduct........ without any further proof of the existence of mens-rea." (v) Thus, once it is established that the Noticee has committed breach of the mandatory provisions, the same would constitute a breach of civil obligation cast upon him and irrespective of existence or non-existence of mens-rea, the Noticee shall be liable for statutory penalty. In this regard, the observations of the Hon'ble Supreme Court in the case of M/s Gujarat Travancore Agency, Cochin Vs. C.I.T. (1989 (42) ELT 350 (SC)] are quite relevant, wherein it was held by the Hon'ble Court that ................Unless there is something in the language of the statute indicating the need to establish the element of mens-rea it is generally ....
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....to industrial policy in force at the time the option is exercised. On the satisfaction of the Board of Approvals, EOU may be debonded on its inability to achieve export obligations, value addition or other requirements. Such debonding is subject to such penalty as may be imposed and levy of the following duties:- (a) Customs duty on capital goods at depreciated value but at rates prevalent on the dates of import; (b) Customs duty on unused raw materials and components on the value on the dates of import and at rates in force on the dates of clearance." 4.9 From the facts as stated above it is quite evident that appellants have made complete declaration in respect of their "finished goods" as well 'WIP - Indigenous" while making the request for de-bonding. These were examined and verified by the jurisdictional Central Excise Authorities while issuing the "No Dues Certificate" to the appellant. Even the figures stated in the declaration made by the appellant in their declaration, no dues certificate issued by the authorities do tally. Subsequent to issue of the no due certificate by the jurisdictional officer, the revenue could not have proceeded to issue the s....
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....credit by the DTA unit. When the respondents have paid duty of Rs. 89,05,616/-, they could not have even attempted to evade duty of Rs. 4,13,369/-, 10. Further, suppression, if any, should be deliberate and with an intent to evade payment of duty and mere act or omission does not lead to suppression of fact or mis-statement, based on the judgment reported in 1995 (78) E.L.T. 401 (S.C.) - Pushpam Pharmaceuticals. 11. Further, the respondents were under a bona fide belief, based on the provisions of law and letters exchanged with the Department, that the duty is not payable on the in-process material and, hence, there was no suppression on their part and, therefore, extended period is not invocable, based on the following judgments : (i) 2007 (215) E.L.T. 169 (S.C.) - Chamundi Die Cast (ii) 2004 (167) E.L.T. 491 (S.C.) - Ugam Chand Bhandari" 4.11 This decision has been affirmed by the Hon'ble Bombay High Court as reported at [2011 (264) ELT A36 (Bom)] stating as follows: "2. This appeal is directed against the order dated 7th October, 2009 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench. The Tribunal in paras-8....
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....ons of the exemption Notification No. 13/81, dated 9-2-1981 has been violated or remains unfulfilled. In this regard, it is seen that one of the conditions of the exemption notification is that the importer exports out of India 100% or such other percentage, as may be fixed by the said Board, or articles manufactured wholly or partly from the goods for the period stipulated by the Board or such extended period as may be specified by the said Board. It is, thus, clear that if the competent authority namely the Board of Approval or the Development Commissioner concerned determines that the unit has failed to export the fixed percentage of articles for the specified period, then in such case it may be held that the conditions of the exemption notification has been violated. As this stage, it will be open for this Department to issue a show cause notice to the Unit for demanding the due duty on the imported goods. 3. Normally the customs authorities should immediately inform the Development Commissioner in case a 100% EOU ceases production prematurely or fails to commence production or export within the stipulated period. In case the Development Commissioner initiates action ag....