TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 97
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....e Central Excise Tariff Act, 1985. A letter of permission (LOP) No. PER:02(2009)SEEPZ-SEZ/EOU/06/ 2009/10/5037 dated 19.05.2009 was issued to the appellants by the jurisdictional Joint Development Commissioner, SEEPZ, Ministry of Commerce & Industry, Mumbai (JDC, SEEPZ) for setting up an unit under EOU Scheme for manufacture of gear box for lifts, parts and accessories of lifts. The appellants have accepted the terms and conditions of LOP issued for their EOU and executed Letter of Undertaking (LUT) with the Joint Development Commissioner, SEEPZ. In pursuance of the LOP given and LUT executed by the appellants, they were allowed duty free import or procurement of capital goods, raw material, components and other required items as approved by the Development Commissioner, in terms of notifications No.52/2003-Customs and No.22/03-C.E. dated both dated 31.03.2003. The appellants had also executed necessary B-17 Bond with the jurisdictional Central Excise authorities to comply with the conditions of the aforesaid notifications. The appellants had imported capital goods and raw materials duty free by availing the above notifications for use in their 100% EOU for manufacture and export o....
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....xported any goods, and thus are required to pay the differential duty for having availed concessional duty in respect of inputs that were contained in the final products which were cleared in the DTA. Accordingly, the appellants were issued with the demand of differential duty vide show cause notice dated 26.12.2011. In adjudicating the SCN, the original authority i.e., Additional Commissioner, Central Excise, Pune-I had confirmed the demand of differential duty of Rs.6,83,301/- under Section 28 of the Customs Act, 1962 along with interest and imposed mandatory penalty on the appellants under Section 112(a) ibid besides confiscation of imported goods under Section 111(o) ibid and allowing the same on redemption fine of Rs.1,00,000/- under Section 125 ibid. The appellants had filed an appeal against the aforesaid order before the appellate authority. The learned Commissioner of Customs (Appeals) while deciding the case, had confirmed the order of the original authority in respect of duty demand and interest, and confiscation of the impugned goods but reduced the penalty imposed under Section 112(a) ibid to Rs.5,000/- as the assessments were provisional and as he found that there is ....
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.... in the finished goods which have not been exported by an EOU in terms of notification No. No.52/2003-Customs dated 31.03.2003 is sustainable and whether such goods are liable for confiscation under Section 111(o) ibid and for imposition of penalty on the appellants under Section 112(a) ibid. 6.2 We find that the issue in dispute lies in the narrow compass of determining the legal requirements for compliance with one of the conditions prescribed under Notification No. 52/2003-Customs dated 31.03.2003 as amended. The relevant condition of the said Notification is as follows: "(d) to pay on demand - (I) An amount equal to duty leviable on the goods and interest at a rate as specified in the notification of the government of India in the Ministry of Finance (Department of Revenue) issued under Section 28AB of the said Customs Act on the said duty from the date of duty free import of the said goods till the date of payment of such duty, if - (i) In the case of capital goods, such goods as are not proved to the satisfaction of the said officer to have been installed or otherwise used within the unit within a period of one year from the date of import or procurement thereof or w....
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....ay duty on the imported raw material since they have paid duty on the finished product at the time of clearance in DTA is devoid of any merits when admittedly this is not a case of export of finished product in which case the duties of customs and excise, as the case may be, are not chargeable on the raw material or inputs as well as finished product. The Adjudicating Authority in para 20 of the Order-in-Original has rightly held that in view of para 1(3)(d)(ii) of Notification 52/2003-Cus. And para 1(4)(b) of Notification 22/2003-CE both dated 31.03.2003, the duty on imported raw materials not used in the export of goods is recoverable from Appellants." 7. We find from the factual matrix of the case, that the appellants had imported capital goods, raw materials, inputs after having obtained valid LOP for an EOU and upon execution of LTU to abide by the conditions of the notification No.52/2003-Customs dated 31.03.2003. These goods were also used in the manufacture of finished goods and awaiting the export orders, the appellants had also obtained advance DTA clearance permission of finished goods from the JDC, SEEPZ. Thus at the time of import of such goods, and their use in t....
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....ty to examine the issue of differential duty payable by the appellants EOU unit when the same had applied for de-bonding. It is only upon the subjective satisfaction of concerned jurisdictional Central Excise authorities about the calculation of the duties payable for debonding as worked out by the appellants, and as are required under the law, the department had given NOC letter for issue of final debonding permission by the JDC, SEEPZ. Accordingly, differential duty in respect of capital goods imported duty free for the EOU operations, inputs/raw materials procured duty free which were lying in stock, were paid along with applicable interest. However, later the differential duty on the inputs/raw materials procured duty free which were consumed in the finished goods which have been cleared in DTA have been demanded, on the ground that the raw materials have not been consumed in the finished products exported and on the other hand have been cleared for DTA consumption. It is also seen that the same jurisdictional Central Excise authorities have accepted the voluntary payment of differential duty on finished goods cleared for DTA and finalized the issue without issue of show cause ....
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....s not the case of the department that the finished goods have been removed for DTA home consumption without valid permission or diverted illegally. On the other hand, the finished goods have been cleared for DTA home consumption on obtaining advance release orders from the JDC, SEEPZ. Thus, we are of the considered view that the appellants have not violated the condition specified in paragraph 1(3)(d)(ii) of the Notification No. 52/2003-Customs dated 31.03.2003 as amended. 8.3 We further find that the issue in dispute in the present case in no more res integra in view of the decisions taken by the Co-ordinate Bench of the Tribunal in the case of (i) Sanjari Twisters (Supra) and (ii) Sarla Polyester (Supra) holding that no duty is required to be paid on the raw materials used in the finished products sold by the EOUs in domestic tariff area. These decisions of the Tribunal have also been upheld by the Hon'ble Supreme Court in a number of cases by dismissing the Civil Appeals filed by the department. The extract of the relevant paragraphs in the said orders is extracted below: Sanjari Twisters "3. The Commissioner vide his impugned order confirmed the demand of duty on certain f....
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....artment is rejected." Kaybee Tex Spin Ltd. "4. We have carefully considered the submissions made by both the sides and perused the records. The revenue has confirmed the demand of customs duty on the raw material imported duty free in terms of Notifications No. 52/2003-Cus., dated 31-3-2003 on the ground that the appellant have cleared the goods in DTA without obtaining the permission of Development Commissioner therefore, the appellant failed to follow the procedure laid down under the EXIM Policy and failed to fulfil the condition of exemption Notification No. 52/2003-Cus., dated 31-3-2003. There is no dispute in the fact that though the appellant have not obtained the permission from Development Commissioner for removal of goods in DTA but the appellant have paid full duty on the finished goods wherein, such imported raw material have been consumed. In case of 100% EOU, as per the policy, the appellant is required to clear the finished goods for export and if any part of the finished goods cleared in DTA, they are required to pay the excise duty equivalent to all customs duty. As per this policy in respect of DTA clearances, the customs duty which was forgone at the time of....
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.... consideration under Section 28 of the Customs Act, 1962. The show cause notice does not propose to demand customs duty on the fabrics the appellant imported on any ground such as that they were not utilised in the manufacture of exported goods. Such a demand could be justified where goods are manufactured by a 100% export oriented unit in a factory in a free trade zone using imported raw materials or components are cleared to a buyer in the domestic tariff area they are not imported. The 100% export oriented unit and a free trade zone are located in India. What is correctly payable is excise duty. The proviso under sub-section (1) of Section 3 of the Central Excise Act, 1944 provides that the duties of excise payable on such goods manufactured in a free trade zone or by export oriented unit shall be equal to the aggregate of the customs duties leviable under Section 12 of the Customs Act, 1962 on like goods imported into India. It also provides that where such duties are ad valorem the value shall be determined in accordance with the provision of the Customs Act, 1962 and Customs Tariff Act, 1975. The measure, therefore, in the statute for the calculation of duty is the customs....
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.... include only physical export or it should include deemed export as well. If deemed exports are held to be not included, then the quantum of clearances permitted in DTA will be accordingly reduced. This issue has been decided by the Tribunal in favour of the assessee on a number of precedent decisions holding that the value of deemed export should be included while determining the FOB value of export, based on which DTA clearances are permitted. However, in this case, the assessee is not in appeal before us. The duty on finished goods stands demanded on the ground that the same is in excess of the permissible limit for the purpose of DTA clearance. The department's claim is to the effect that the raw material used in such finished products cleared in DTA should be treated as not used for the intended purposes and the duty on import should be demanded. We do not agree with this view. In this case, it cannot be said that the raw materials have not been used for the intended purpose. Even if there was clearances in excess of permissible limit it may amount to be case of diversion of finished goods, the duty shall be payable in respect of finished goods and no duty become demandable on....
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....applicable. 4.7 We find that the appellant have also raised the ground of limitation, on this, the fact is that the appellant have cleared the goods in DTA on payment of full duty by following the procedure such as issuance of excise invoice wherein the duty payment has been shown, the same particulars were reflected in their monthly ER-2 return. In this fact when the department was in complete knowledge regarding the clearance of finished goods in DTA, they were not prevented from verifying the fact that whether the appellant have obtained the permission from Development Commissioner or not. However, the department has not raised any objection at the relevant time, it is only subsequently on scrutiny of ER-2 return were carried out. There is no change of circumstances at the time of clearance of goods, filing of ER-2 return and the verification of the same at the later stage therefore, there is absolutely no suppression of fact or misdeclaration with intend to evade payment of duty on the part of the appellant. Therefore, we are of the clear view that extended period of demand cannot be invoked hence the demand for extended period is not sustainable on limitation also." 9. Fr....