TaxTMI 
TaxTMI 
2025 (9) TMI 124
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....rification, the officers noticed a shortage of 23,780.25 Kg of textured yarn at Unit No. 1 and a shortage of 11,359.220Kg of 44/24 Denier Nylon Filament yarn at Unit No. 2. On being enquired, Shri K.C. Kapadia, Director, stated that they had illicitly cleared the said goods i.e. 23,780 Kg. of Textured Yarn and 11,359.220 Kgs. of Nylon Filament Yarn (NFY) to M/s Gajraj Corporation, Surat without preparing any C. Ex. invoice, without entering in Central Excise statutory records and without payment of appropriate duties leviable thereon. Shri K.C. Kapadia admitted his offence and showed his willingness to pay the evaded customs/Central Excise duties leviable on illicitly cleared goods. 2.1 During the search, Central Excise invoices in the name of M/s Sudarshan Overseas, a 100% EOU, Surat were recovered from the premise of Unit-1 of the appellant. In follow up action, the officers visited M/s Sudarshan Overseas on 25.10.99 and shown to Shri Rameshbhai Laljibhai Patel, in-charge of Sudarshan Overseas, the invoices issued by Unit-1 under which clearances of Textured Yarn to M/s Sudarshan Overseas was shown. Shri Rameshbhai Laljibhai Patel stated that the goods shown in the said invoic....
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....use Notice dated 18.01.2001, Unit-1 and Unit-2 were directed to show cause as to why:- (a) Central Excise Duty equal to aggregate of Customs Duty amounting to Rs. 6,05,956/- leviable on illicitly removed Nylon Twisted Yarn weighing 11,359.220Kg valued at Rs.12,36,573/ should not be demanded and recovered from them under proviso to sub-section 11A of Central Excise Act, 1944; (b) The evaded Central Excise Duty equal to aggregate to Customs Duties amounting to Rs. 8,40,854/ leviable on DTA clearance of Polyester twisted yarn should not be demanded and recovered from them under proviso to sub-section (1) of Section 11A of Central Excise Act, 1944; (c) Interest at 24% per annum on the delayed payment of evaded Central Excise Duty should not be demanded and recovered from them under section 11-AB of Central Excise Act, 1944; (d) Penalty should not be imposed on them under Rule 173-Q (1) and Rule 209 of Central Excise Rules, 1944 read with Section 11AC of Central Excise Act, 1944. The Show Cause Notice dated 18.01.2001 was adjudicated wherein the demand of duty, interest and penalty were confirmed. Being aggrieved, both the appellants preferred appe....
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.... the following decided cases:- (a) Commissioner of Central Excise, Jaipur-II vs. Pratap Singh 2003 (153) ELT 711 (Tri.-Del.) upheld by Hon'ble Supreme Court in Pratap Singh vs. Commissioner of Central Excise, Jaipur-II -2003 (156) ELT A382 (SC) (b) Commissioner of Central Excise, Visakhapatnam-II vs. NCC Blue Water Products Limited - 2010 (258) ELT 161 (SC) (c) Sarla Performance Fibers Limited vs. Commissioner of Central Excise, Surat-II - 2016 (336) ELT 577 (SC) 3.1 The learned Counsel for the appellant also submitted that no corroborative evidence has been produced by the department regarding the allegation of clandestine / illicit clearance of the goods as the department failed to investigate the case in the light of statements of buyers of the goods and transporters. The burden of proof is on the Revenue to establish their case and the department has failed to discharge their burden. Therefore, the demand cannot be allowed to stand and it is liable to be set-aside. The learned Counsel for the appellant relied upon the Final Order No. 12237-12239/2024 dated 27.09.2024 passed by CESTAT Ahmedabad in the case M/s. Indian Polyfins & Ors in Appeal No....
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....dule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985 : Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, - (i) in a free trade zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and allowed to be sold in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under Section 12 of the Customs Act, 1962 (52 of 1962), on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of Cu....
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....ommissioner. No permission is required to sell the goods manufactured by 100% EOU lying with it at the time the approval is accorded to debond. The Apex Court further observed in Para 25 that the provisions of Chapter VA (Rules 100A to 100H) would not be applicable where 100% EOU is outside the EOU Scheme after it is debonded". 10. Following the above referred observations of the Apex Court, the Bangalore Bench in Kuntal Granites (P) Ltd. and South Zone Bench in T. Gayathri Reddy (supra) had taken the view that in a case of removal of the goods in a clandestine manner by a 100% EOU, without payment of duty, the duty in terms of proviso to Section 3(1) of the Act would not be leviable. But it has been nowhere expressly or impliedly ruled by the Apex Court or by the Benches of the Tribunal in the above referred cases that where the goods had been removed/sold without permission by an 100% EOU, even central excise duty under main Section 3(1) would be also not payable by the assessee, which is a charging section and clearly enacts that excise duty is leviable on all excisable goods produced or manufactured in India. The proviso to this section, referred to above, only lays do....
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....of 2001). 2. It has come to the notice of the Board that field formations are interpreting the judgment of Apex Court to the effect that if the goods cleared by EOUs are not allowed to be sold into India, the Section 3(1) of Central Excise Act, 1944 is not applicable and duty can be demanded under the provisions of Customs Act, 1962 only. Board has taken a serious view of this mis-interpretation. The provisions of Central Excise Act, 1944 shall apply to all goods manufactured or produced in India for which Section 3 is the charging section. EOUs are also situated in India and the chargeability under Central Excise Act is never in doubt. Therefore, it is clarified that prior to 11-5-2001, the clearances from EOUs if not allowed to be sold in India, shall continue to be chargeable to duty under main Section 3(1) of Central Excise Act, 1944. Appropriate action may be taken immediately to safeguard revenue and all pending decisions may be settled accordingly." The Board's circular is binding and has to be given full weightage irrespective of the different interpretation by the Courts, as even observed by the Apex Court in CCE, Vadodara v. Dhiren Chemical Industries - ....
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....ngh vs. Commissioner of Central Excise, Jaipur-II 2003 (156) ELT A382 (SC) and the Supreme Court dismissed the petition for special leave to appeal against the order of the Tribunal as mentioned above. 5.4 In Commissioner of Central Excise, Visakhapatnam-II vs. NCC Blue Water Products Limited - 2010 (258) ELT 161 (SC) the shrimps and shrimp seeds were cleared in DTA without permission from Development Commissioner. The question before the Hon'ble Supreme Court was whether the duty was payable under Section 3(1) of Central Excise Act, 1944 or under the proviso to Section 3(1) of the Act. The Hon'ble Supreme Court held that expression "allowed to be sold in India" was considered by the Hon'ble Supreme Court in SIV Industries case [2000 (117) ELT 281 (SC)] and it was held that duty on goods sold without permission is payable under main Section 3(1) of the Central Excise Act, 1944. The permission was not given by Development Commissioner at the time of sale of impugned goods in this case, therefore, the ratio of SIV Industries and CBE&C Circular dated 13.02.2002 are applicable. The Hon'ble Apex Court held that excise duty was chargeable under main Section 3(1) of the....
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.... in Commissioner of Central Excise, Visakhapatnam-II vs. NCC Blue Water Products Limited (supra) and Sarla Performance Fibers Limited vs. Commissioner of Central Excise, Surat-II (supra). I am also of the view that the order passed in Himalaya International Limited - 2003 (154) ELT 580 (Tri. LB) has been overruled by Hon'ble Supreme Court in Sarla Performance Fibers Limited vs. Commissioner of Central Excise, Surat-II (supra). Therefore, order passed in that case is not binding on this Tribunal. 5.6 I agree with the learned Counsel for the appellant that ignoring the law laid-down by Hon'ble Apex Court in the above decisions, the learned Commissioner (Appeals) while passing the impugned order came to the conclusion that duty payable by the appellant is only under proviso to Section 3(1) of Central Excise Act, 1944 therefore, the order passed by the Commissioner (Appeals) cannot be sustained. I also agree with the learned Counsel for the appellant that Commissioner (Appeals) without following the settled principles of law as mentioned above, relied upon the Circular No. 01/2004-Cus dated 04.01.2004 and distinguished the facts of the case Sarla Performance Fibers Limited (....
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....Gupta reported in 2015 (315) E.L.T. A89 (All.). In this case, the Tribunal also cited the case of Arya Fibres Pvt. Limited vs. CCE, Ahmedabad-II reported in 2014 (311) E.L.T. 529 in which the Tribunal examined the issue of clandestine removal and in para 40 of the said order laid down the parameters to prove clandestine removal of goods which is reproduced hereunder:- "40. After having very carefully considered the law laid down by this Tribunal in the matter of clandestine manufacture and clearance, and the submissions made before us, it is clear that the law is well-settled that, in cases of clandestine manufacture and clearance, certain fundamental criteria have to be established by Revenue which mainly are the following : (i) There should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions; (ii) Evidence in support thereof should be of: (a) Raw materials, in excess of that contained as per the statutory records; (b) Instances of actual removal of unaccounted finished goods (not inferential or assumed) from the factory without payment of duty; (c) Discovery of suc....