TaxTMI 
TaxTMI 
2024 (4) TMI 1011
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....te/remnants shall not be subject to achievement of positive NFE." Notification No.23/2003 stipulates exemption to DTA clearances of specified goods produced in EOU/EHTP/STP in exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in the column (3) of the table below, and falling within the chapter heading, sub heading, specified in corresponding entry in column (2) of the said table, produced or manufactured in an EOU or EHTP or STP to any other place in India in accordance with the Foreign Trade Policy and subject to the relevant conditions specified in the annexure to this notification and refer to the corresponding entry in column (5) of the said table from so much of the duty of excise leviable there in under Section 3 of Central Excise Act 1944 as specified in the corresponding entry in column (4) of the said table. As per the norms discussed above, the appellant is to clear scrap/waste/remnants, however, it was found that in the guise of handling loss, the appellant had cleared 2,2....
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....lant, nor there was any shortage of iron ore in the EOU at any given point of time. It is an admitted fact that the entire quantity of iron ore removed from the EOU has been exported. It is also submitted that there was no DTA sale during 2006 to 2007 and 2007 to 2008 and a very limited DTA sale from 2008 to 2011. The closing stock of iron ore as on 31.3.2010 was 4,01,295 MT and the same is reflected in the ER return for the month of March 2010. During September/October 2010 verification stock of iron ore at the railway yards and the load ports at Goa Kakinada, Chennai, Vizag, Belekeri and Krishnapatnam was carried out and it was found that there was a shortage of 61,513.30 MT and 1,59,171.68 MT MT tons and these shortages were incorporated in the Annual Report for the year 2010-2011 and the report reflects the shortage of 1,60,867 MT of iron ore fines and 59,818 MT of iron ore lumps. It is submitted that this shortage is only on account of accumulated shortages over many years due to handling, loading, unloading, multimodal transportations, weathering, different methods of weighments etc.,; and were consolidated in the Annual Report for 2010-2011. Since this is a common feature wi....
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.... It is stated that in order to verify the claim of handling loss to such a huge extent, clearance/export documents were verified and the quantity shown in invoices, ARE-1s, shipping Bills, Bills of Lading for relevant period, it was found that the entire quantity of iron ore removed from the manufacturing unit was exported and there was no handling loss whatsoever and they have realized the sale proceeds on the entire quantity of iron ore cleared for export from the buyer. It was also noticed that no provisions were made in the Balance Sheets for having accumulated such handling losses in any of the years. But the appellant confirms that the said quantity has not been exported and the shortage was noticed at railway yards/ports and not at factory and therefore, the said quantity of iron ore has been cleared in Domestic Tariff Area without payment of Central Excise duty and without raising any documents and without following any Central Excise procedures, thereby contravening the provisions of the Foreign Trade Policy and the Notification No.23/2003 dated 31.03.2003. 3.1 It is further submitted that it is an undisputed fact that the appellant themselves have noticed that there is....
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....at the appellant's claim that the show-cause notice and the Order-in-Original itself admits and confirms that the entire quantity of iron ore removed from the EOU has been exported and the wastage or shortage of iron ore to the extent of 2,20,685 MT cannot be attributed to the Iron ore cleared by the EOU from October 2006. The fact that what is cleared from the factory is exported goes to prove that there can be no shortage with reference to the export consignments. Once shortage is noticed, it is for the appellant to explain the said shortages with valid evidences, which has not been elucidated by them and the claim that the shortages is for several years from 2002 onwards, when they were not registered as EOU, there are no evidences as no such shortages were reported in their financial records. The appellant's claim that the DGFT has accepted the reasons for the wastage or shortage of the Iron ore and had directed the Development Commissioner, Bangalore to apply for wastage norms to the Norms Committee in the Directorate but no orders/ instructions of the DGFT or Ministry of commerce accepting their request and fixing norms of wastage/shortage is placed on record till date. In th....
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....e failed to produce any documents to substantiate that the said goods have suffered Value Added Tax (VAT). Accordingly, the demand made as per the quantification made in the show-cause notice is liable to be upheld as the appellants have failed to comply with the conditions stipulated in the relevant conditional Notifications. 3.7 With regard to the limitation issue, it is submitted that the shortages were detected by the Department on 25.08.2011 and undertook investigation in the said case. After conclusion of the investigation, the show-cause notice was issued on 29.01.2014. Since the appellant had failed to prove that the shortages were for many years including the years before 2011, the demand notice issued on 29.01.2014 for the date of cause of action i.e., 25.08.2011 is well within the larger period of five years as they had failed to intimate the department of the said shortage at any time till it was noticed on 25.08.2011. Hence the said demand for the period therein is covered under the extended clause as the fact of shortage was suppressed and not declared with intent to evade payment of duty. The decision in the case of Mehta & Co.: 2011 (264) ELT 481 [S.C.] is applic....
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....(A) 9150 3493765 9150 The table above very clearly shows that the quantity removed from the factory has been exported. As rightly argued by the Revenue, if the losses were on account of handling, loading, unloading, multimodal transportations, weathering, different methods of weighments etc.; then the quantity exported definitely cannot be the quantity that is exported since these losses supposedly are between the factory to the loading point of export. The details of production and sales are given in tabulated form. Details of production and sales (Qty. in MT) Sl. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-11 1 Total Qty. Iron manufactured-lumps 217750 38600 440530 175000 543000 2 Total Qty. iron manufactured fines 942924 1070600 856830 661000 586000 3 Total production 1160674 1456600 1308936 836000 1129000 4 Total Qty. Iron ore exported lumps 226631 319912 383770 134940 33000 5 Total Qty. Iron ore exported fines 818400 808216 1011975 756333 283593 6 Total Export Sales 1045031 1128128 1395745 900273 316593 7 ....
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....f NFE. (e) Scrap / waste / remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scrap / waste / remnants shall not be subject to achievement of positive NFE. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste / remnants may also be exported. (f) There shall be no duties / taxes on scrap / waste / remnants, in case same are destroyed with permission of Customs authorities. (g) By-products included in LoP may also be sold in DTA subject to achievement of positive NFE, on payment of applicable duties, within the overall entitlement of sub-para 6.8(a). Sale of by-products by units not entitled to DTA sales, or beyond entit....
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....e leviable thereon under section 3 of the Central Excise Act as specified in the corresponding entry in column (4) of the said Table. TABLE (the relevant clauses are reproduced below) Sr. No. Chapter or heading No. or sub-heading No. Description of Goods Amount of Duty Condi- tions (1) (2) (3) (4) (5) 4. Any Chapter All goods produced or manufactured wholly from the raw materials produced or manufactured in India, other than those referred to in Sr. Nos. 5, 6 and 7 of this Table. In excess of amount equal to 30% of the duty payable under section 3 of the Central Excise Act, 1944. Illustration.- Assuming product X has the value Rs. 100 under section 14 of the Customs Act,1962 and is chargeable to basic custom duty of 25% ad valorem, special additional duty of 4% ad valorem and not chargeable to additional duty. The computation of duty required to be paid would be as follows : Basic Customs duty = Rs. 25/- Value for the purpose of special additional duty if leviable = Rs. 100/- + Rs. 25/- = Rs. 125/- special additional duty if leviable= 4% of Rs. 125/-= Rs. 5.0/- Total duty payable but for this exemption= Rs. 25/-+ Rs. 5.....
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..... 1(RE-2003) /2002-2007, dated the 31st March, 2003, as amended from time to time; (vii) "Domestic Tariff Area" means India except special economic zones and export-oriented undertaking, Software Technology Park units and Electronic Hardware Technology Park units. 4.4 From the above Notification and the provisions at para 6.8 of the Foreign Trade Policy clearly mentions that the DTA clearances include Scrap/waste/remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste / remnants may also be exported. 4.5 The Case laws relied upon by the appellant are on different set of facts altogether. The decis....
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.... for clearance as provided under para 6.01 (d) pg. 139 (ii) of FTP under EOU / EHTP / STP / BTP scheme without payment of duty and/or taxes as applicable, provided, the said duties and/or taxes has not been paid and goods have not been cleared from Customs. (e) Consumption of inputs by the EOU / EHTP / STP / BTP unit shall be based on the Standard Input Output Norms (SION) provided that: (i) where no SION have been notified, generation of waste, scrap and remnants upto 2% of input quantity shall be allowed; (ii) where additional items other than those given in SION are required as inputs or where generation of waste, scrap and remnants is beyond 2% of input quantity, use of such inputs shall be allowed by the jurisdictional DC within a period of three months from the date of application and based on self-declared norms, with the unit undertaking to adjust self- declared / ad hoc norms in accordance with norms as finally fixed by Norms Committee in DGFT; (iii) in case of any difficulty in fixation of SION as above, BOA in consultation with Norms Committee in DGFT, will decide on a case-to-case basis. At para (e), it is categorically mentioned t....
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....itioner to move the competent authority under Foreign Trade (Development and Regulation) Act, 1992 and obtain a clarification. Instead of doing so, the respondent applied his own understanding of the policy notification. What the respondent has done is not in accordance with Section 17 of the Customs Act." 4.9 With regard to limitation, it is an admitted fact that the shortage was detected by the Department only on 25.08.2011 and the show-cause notice was issued on 29.01.2014 which is within 5 years of the date of knowledge. In fact, no return was filed explaining the shortages and it was noticed only after visiting the unit and the return was filed at a later date. The Hon'ble Supreme Court in the case of Commissioner of C. EX., Visakhapatnam Versus MEHTA & CO. 2011 (264) ELT 481 [S.C.] held: "24. The cause of action, i.e., date of knowledge could be attributed to the appellant in the year 1997 when in compliance of the memo issued by the appellant and also the summons issued, the hotel furnished its reply setting out the details of the work done by the appellant amounting to Rs. 991.66 lakhs and at that stage only the department came to know that the work order was to....