TaxTMI 
TaxTMI 
2024 (3) TMI 365
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....2006 towards the duty demand made above. To pay the differential amount of Rs. 3,28,20,709/- (c) Imposed penalty of Rs. 1 Crore under Rule 25 of the Central Excise Rules, 2002. 2. The above demands are made on the ground that the M/s Asian Peroxides Ltd., Plant-II, Kotalpur, Nellore District (hereinafter referred to as the Appellants), being a 100% EOU, made clearances into the DTA during the period 01.04.2005 to 11.01.2006 and paid only the applicable Central Excise Duty and not the aggregate of Customs Duties as required to be paid under Notification No. 23/2003-CE dated 31.03.2003 read with proviso to Section 3(1)(b) of the Central Excise Act, 1994. FACTUAL POSITION 3.1 The Appellants were a 100% Export Oriented Unit (EOU) engaged in the manufacture and export of Hydrogen Peroxide classifiable under Chapter Sub Heading 28.47 of the Central Excise Tariff Act, 1955. 3.2 The appellants submit that the said the said 100% EOU unit was set up in the year 1995 in terms of the letter of permission granted by the Secretariat of Industrial Approvals in the Ministry of Industry, Department of Industrial Development, New Delhi vide No. PER:471/(1993)EOB/409/93 dated 03.12.1993. 3.3 ....
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....further developments in this matter are set out in the form of a Table below containing the list of dates and events : Sl. No. Date Event 1. 29.10.2004 ACCE, Nellur Division furnished a list of capital goods with the depreciated value to the Development Commissioner, VSEZ to enable conversion into EPCG Scheme. 2. 01.11.2004 Development Commissioner, ESCZ grants 'No Objection Certificate' for conversion of the EOU into EPCG Scheme under Para 6.18(d) of Foreign Trade Policy and Para 5.4 of the Hank Book of Procedure 3. 03.12.2004 EPCG License No. 0430002134 dated 03.12.2004 granted to Appellants by JDGFT, Chennai 4. 31.01.2005 Appellant submits a letter to CCE, Guntur requesting for acceptance of Bank Guarantee of Rs. 27.50 lakhs to enable switch over to EPCG Scheme 5. 11.02.2005 Commissioner accepts the request for reduction of Bank Guarantee and fixes an amount of Rs. 22.00 lakhs as Bank Guarantee to enable the Unit to Debond 6. 25.03.2005 Consequent to exit from the EOU scheme, the Range Officer assesses the Bills of Entry for payment of Customs and Central Excise Duty on imported and locally procured goods. Further directions were is....
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....ances under the EPCG Scheme on payment of duty. This is duly reflected by them in their monthly returns, illustrative copies of which are collectively enclosed in Appeal Memo 18. 14.08.2008 Submission of documents to JDGFT, Chennai for redemption of EPCG licence and issue of EODC SHOW CAUSE NOTICE 4.1 In the above factual background, a Show Cause Notice dated 14.06.2010 was issued to the Appellants making the proposals as set out in para-1 (supra). CASE OF THE DEPARTMENT IN THE SHOW CAUSE NOTICE 5.1 The Show Cause Notice alleged that the Appellants switched over from 100% EOU Scheme to the EPCG Scheme on 04.04.2005 without any permission from the Development Commissioner and without obtaining a "No Dues Certificate" from the jurisdictional Assistant Commissioner in contravention of the procedures specified in Para 6.18 (d) and Para 6.18 (e) of Foreign Trade Policy 2004-09. 5.2 The Appellants being a 100% EOU made clearances into the DTA from the period April 2005 to 11.01.2006 without any proper permission and without paying applicable duties in contravention of Notification No. 23/2003-CE dated 31.03.2003 with an intention to evade payment of duty. 5.3 The Appellant....
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....y prohibition during the period of conversion was that the 100% EOU would not be entitled to import of procure locally without payment of duty any inputs or capital goods, in the interregnum. 8.7 It is undisputed position that the Development Commissioner granted "in-principle" permission to exit from the EOU Scheme vide letter dated 18.11.2004 and since the Excise Department did not issue the necessary NOC the validity period of the "in-principle" permission was extended upto 18.11.2004. 8.8 It is also undisputed factual position that the Company has been furnished with a letter on 25.03.2005 by the Jurisdictional Superintendent of Central Excise, who after assessing the goods, directed payment of Customs and Excise Duty payable for de-bonding of the Unit. 8.9 Pursuant to the letter dated 25.03.2005 of the Jurisdictional Superintendent of Central Excise, the Appellants paid the assessed duty and furnished necessary Bonds and Bank Guarantee as required by the department and by its letter dated 30.03.2005, furnished the details of duty payment and execution of Bonds to the Assistant Commissioner, Nellore Division, Nellore. 8.10 In the meanwhile, the Development Commissioner of E....
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....principle' permission letters dated 18.11.2003 and dated 4.11.2004 and has requested for issue of Final Order to Exit from EOU Scheme. Whereas the Assistant Commissioner of Customs & Central Excise, Nellore Division, S.M. Towers, Dargamitta, Nellore vide his letter C.No.IV/16/57/2003-T2 dated 3.1.2006 has informed that M/s Asian Peroxides Ltd., had executed undertaking and bank guarantee with them and paid all the amounts on 29.3.2005 & on 30.3.2005 for the purpose of debonding and no dues are pending with the department for the purpose of debonding / exit from EOU Scheme. Whereas the unit has commenced commercial production on 27.9.95. The export performance of the unit for the cumulative period from 1.4.2000 to 31.3.2005 (second block of five years) has been reviewed as per monitoring guidelines. During the period the unit has earned a Net Foreign Exchange Earnings for a value of Rs. 3705.80 lakhs. There are no show cause notices issued under FT(DR) Act, 92 pending adjudication against the EOU. Now since the Assistant Commissioner of Customs & Central Excise, Nellore vide his letter dated 3.1.2006 has confirmed that the unit has discharged all it's liabilities by 30.3.20....
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....ssary formalities as on 30.3.2005 could have been issued on 31.3.2005 itself, which would have rendered these proceedings wholly avoidable. 8.20 The Appellants submit that it is now settled law that the department cannot be permitted to take advantage of the delay caused by it and raise a duty demand. In this regard, the Appellants rely on the following decisions: (i) Priyanka Overseas Vs UOI [1991 (51) ELT 185 (SC)] (ii) Kuil Fireworks Inds. Vs CCE [1997 (95) ELT 3 (SC)] 8.21 The Appellants, therefore, submit that this demand having emanated entirely due to the delay caused by the department in issuing the necessary communication to the Development Commissioner, is not sustainable in law. 9. Learned AR for Revenue relies on the impugned order. 10. Having considered the rival contentions, we find that appellant was granted permission to exit from 100% EOU status to EPCG Scheme by inprinciple permission to exit on 20.11.2003. Thereafter, it seems the Excise/Customs Department did not issued the necessary No Objection Certificate within the reasonable time of 2 to 3 months. The validity of the period for in-principle permission was extended upto 18.11.2004 by the Developmen....