TaxTMI 
TaxTMI 
2026 (5) TMI 1177
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....een filed against the same Order-in-Original and the issues involved in all these appeals are common, they are taken up together for decision by a common order. 2. The facts of the case are that M/s. Abhishek Exports (hereinafter referred to as the "appellant") is a 100% Export Oriented Unit (EOU) inter alia engaged in the manufacture and export of marbles. During the period from 2002 to August 2005 ('disputed period'), the Appellant imported Marble Blocks duty free, by availing the exemption provided under the Notification Nos. 53/97- Cus. dated 03.06.1997 and 52/2003-Cus. dated 31.03.2003. 2.1. The imported Marble Blocks were cut into Marble Slabs / Tiles. The said Marble Slabs / Tiles were exported as well as sold in the Domestic Tariff Area ('DTA) upon grant of permission by the Development Commissioner. The goods sold in the DTA were cleared upon payment of applicable Excise duty as per Notification Nos. 02/95-CE dated 04.01.1995 and 23/2003-CE dated 31.03.2003, i.e., at 50% of the import duty leviable on like goods if imported into India. 2.2. The Appellant also domestically procured Serpentine Marble Blocks, cut them into Serpentine Slabs/ Tiles and exported the sam....
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....n the following questions of law: a. No excise duty is payable as the process of cutting Marble Blocks into Marble Slabs/ Tiles does not amount to manufacture; and b. Excise duty paid is liable for adjustment against Customs duty demand. 10.06.2010 Decision passed by the Hon'ble CESTAT New Delhi in Abhishek Exports vs. Commissioner of Central Excise, Jaipur-II, Final Order Nos. C/86-88/2010 and Misc. Order No. C/81/2010 dated 10.06.2010 disposing of the miscellaneous application and remanding the matter for re-adjudication after considering the decision in Jain Grani (supra) and additional ground taken by the Appellant. The show cause notices dated 16.05.2005 and 08.11.2005 were kept in call book due to the pendency of the department's appeal against Jain Grani (supra) before the Hon'ble Supreme Court. 02.08.2023 Judgement of the Hon'ble Supreme Court vide Commissioner of Central Excise, Jaipur-II vs. Jain Grani Marmo Pvt Ltd, Civil Appeal Nos. 255- 256/2010 dated 02.08.2023, dismissing the departmental appeal due to low tax effect. The show cause notices dated 16.05.2005 and 08.11.2005 were retrieved from the call book and we....
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....Customs penalty on Co- Appellants Rs. 2,50,000/- u/s 112 of Customs Act Rs. 2,50,000/- u/s 112 of Customs Act Rs. 2,50,000/- u/s 112 of Customs Act Rs. 2,50,000.- u/s 112 of Customs Act Redemption fine on Appellant Rs.50,00,000/- u/s 125 of the Customs Act. 4. Aggrieved by the demands of Customs and Central Excise duties confirmed in the impugned Order-in-Original dated 28.01.2025, along with interest and penalties, the present appeals have been preferred before the CESTAT, New Delhi. 5. Regarding the demand of central excise duty confirmed in the impugned order, the learned Counsel appearing on behalf of the appellants submitted that they have under taken the process of cutting the marble blocks imported by them; the said process of cutting the marbles into marble slabs/tiles does not amount to 'manufacture' as defined under Section 2(f) of the Central Excise Act, 1944. As per Chapter Note 6 to Central Excise Tariff, in relation to products of CTH 2515 (marble etc) and 2516 (granite etc), the process of cutting or sawing or sizing or any other process, for converting of stone blocks into slabs or tiles shall not amount to 'manufacture' during the relevant p....
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....lying on the decisions cited supra, the learned Counsel for the appellants submits that the demand of central excise duty confirmed in the impugned order is legally not sustainable, thus contending that the impugned order is liable to be set aside to the extent the excise duty is demanded. 6. Regarding the demand of Customs duty vide the impugned order, the learned Counsel for the appellants makes the submission that the facts of the present case are similar to the facts and circumstances of Jain Grani and hence the said decision is squarely applicable to the present case. He explained that in Jain Grani, the Tribunal has held that the condition for duty free import by a 100% EOU, as prescribed in Notification No. 52/03Cus. has not been fulfilled in respect of imported marble blocks and, therefore, the same are not eligible for duty exemption. Since these marble blocks, after their use have not been used for the intended purpose, the appellant was held to be liable to pay custom duty; however, the customs duty demanded has been restricted to normal period of limitation, as the Department was well aware of the activities of the appellant being a 100% EOU and no suppression of fac....
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.... 24,72,764 63,22,187 Amount paid in excess 1,07,756 7.3. From the above table, it can be seen that out of the total customs duty demanded, if the demand pertaining to the extended period is excluded, then the balance customs duty demand pertaining to normal period of limitation amounts to Rs. 63,22,187/-. However, the appellant has paid duty at the time of DTA clearance duty to the tune of Rs. 64,29,943/-, which when adjusted against the customs duty demand, results in excess duty paid to the extent of Rs. 1,07,756/-. Thus, the appellant makes the submission in this regard that no additional amount remains payable in the present case and the Impugned Order is liable to be set aside to this extent. 8. The learned Counsel for the appellant also contends that the extended period of limitation cannot be invoked as there was no collusion or wilful misstatement or suppression of facts established in this case. He submitted that the appellants have not suppressed any information regarding imports/ procurement and exports/ clearance from the authorities; that they have been filing ER-1 returns regularly containing all necessary details of activities unde....
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....knowledge of the department, duty cannot be demanded for extended period of limitation. It is the appellant's case on this score that relying on B-17 bond to uphold the demand irrespective of the limitation period would result in making the statutory provisions redundant. Thus, the appellant also contends that the demand for the extended period confirmed by invoking the B-17 Bond executed by the appellant is legally not sustainable. 9. Furthermore, the appellant submits that the marble blocks are not liable for confiscation and the redemption fine not imposable in this case; that provisions of Section 111(d) and 111(o) of the Customs Act are not invokable as regards the Marble Blocks in the present case inasmuch as neither their import is prohibited, nor has there been any non-observance of any condition surrounding their import. Further, it is submitted that the Marble Blocks are not liable for confiscation because they have been converted into Marble Slabs/ Tiles and also cleared into DTA; they are no longer physically available. 9.1. In support of the contentions hereinabove, reliance is placed by the appellants on the decision of the Tribunal in M/s. Mahindra Aerostructur....
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.... declared as 'Polished Marble Slabs'; in ARE-3, the description was declared as 'unpolished Marble slabs'; In the Bill of Entry, the description was 'Rough Marble Blocks'; the description on the document by which the goods were cleared in DTA is not available. From these descriptions, he submits, it was not possible to find out as to whether the goods exported have been obtained from imported inputs or indigenous inputs. In view of the above factual position, it has been argued by the learned Special Counsel for the Revenue that the contention of the appellants that the demand of customs duty can be made only for the normal period is not correct and accordingly, submits that the appellants are liable to pay the customs duty as demanded in the impugned Order-in-Original. 10.1. Regarding the demand of excise duty confirmed in the impugned order, the learned Special Counsel for the Revenue relied upon the findings of the learned adjudicating authority in the impugned Order-in-Original in paragraphs 54-57, wherein the adjudicating authority has observed that DTA sale was available to the appellant only by virtue of para 6.8 of Exim Policy/ FTP and provisions made in Central Excise A....
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....d of custom duty, if any, confirmed for the normal period of limitation, the learned Special Counsel opposes the same and submits that central excise duty was paid by the appellant on domestic clearances during the period 2002-August 2005, which is the period for which show cause notices have been issued to them; however, the various judgements which the Tribunal has relied upon in Jain Grani to arrive at the conclusion that no excise duty was payable, pertains either to the period prior to the impugned clearances or during that period. He submits that despite these decisions, the appellants were paying excise duty at concessional rate for their DTA clearance without any demur. It is further submitted that as per the decision of the Supreme Court in Mafatlal Industries, if an assessee pays the duty based on a wrong understanding, he is still governed by the Refund provisions of the Act and therefore, any demand of Customs duty cannot be automatically adjusted against the central excise duty which was paid by them under a clear notion that they are liable to pay this duty; therefore, as far as the payment of central excise duty is concerned, they are required to go through the route....
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....n import of marble was not available. M/s. Jain Grani filed an Appeal No. 126-127 /2009 before the High Court of Rajasthan. It was prayed that the order of the Tribunal relating to confirmation of Customs duty on imported inputs is liable to be set aside. The High Court by order dated 21.02.2025 decided the appeals and upheld the order of the Tribunal as far as the confirmation of Customs duty for the normal period of limitation is concerned. The Department had filed Appeal Nos. 255-256/2010 before the Supreme Court against the part of Tribunal order wherein it was held that the central excise duty was not leviable on mere slitting of marble stones. By order dated 02.08.2023, the appeals were dismissed on account of low tax effect. 12.2. From the facts of the present case and Jain Grani narrated above, it is seen that the Department has kept the present case in 'Call Book' as the issue involved in the present case are similar to the facts of Jain Grani. The adjudication of this case was done after disposal of the Jain Grani by the Supreme Court. Thus, the decision of the Tribunal in Jain Grani, by Final Order No. C/84-85/2009 (PB) dated 17.02.2009, as upheld by the High Court of....
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.... prescribed separate input-output norms for dressed Serpentine blocks/ Serpentine slabs/ tiles in the SION. From the CBEC circular No. 12/08-Cus dated 24.07.2008 explaining the provisions of the 2004-2009 EXIM policy (para 8 of the circular), it is clear that he goods sold by an EOU into DTA must be 'similar 'to the goods exported, within the meaning of the term 'similar 'as defined in the Board's circular No. 07/2006-Cus dated 13.01.06 and in the case of a multi product 100% EOU manufacturing say, product A and B, it is not open to the unit to exclusively export the product A and keep the product B exclusively for DTA sale, unless the product A and B are similar. In fact, as per the EXIM policy 2004-2009, a 100% EOU manufacturing products A and B for export, can sell into DTA one product, say A, upto 75% of its FOB value of exports, within the overall DTA sale entitlement. The idea behind this condition is to prevent the misuse of 100% EOU scheme by duty free import of costly material for use exclusively in the manufacture of finished goods for DTA sale and meeting the export obligation by exporting the finished goods made out of domestically procured cheap material. In this case,....
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.... dispute is as to whether the proviso to Section 28(1) of the Customs Act is invokable for demand of customs duty on the imported marble blocks and whether the appellant company is liable for penalty under Section 114A of the Customs Act. The Commissioner has held the Appellants to be guilty of suppression of facts with intention to evade the payment of duty on the grounds that - (a) periodical ER-2 returns filed by the Appellant company did not show the details of the clearances made for export under bond of the dressed blocks/slabs/tiles manufactured of imported marble stone and indigenously procured serpentine stone and from these returns, it could not be made out as to whether the Appellant company was exporting only the dressed blocks, slabs and tiles of the indigenously procured serpentine blocks and this could be ascertained only after surprise visit to the factory and inquiry from Shri Mukesh Modi; and (b) the DTA invoices of the Appellant company invariably used the description - "Marble slabs" in the column of "description of the goods cleared", from which it could not be ascertained as to what kind of goods were being cleared by the Appellant. ....
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.... facts with intent to evade the payment of duty and therefore for recovery of duty on imported marble blocks, only the normal limitation period under Section 28(1) would be available and the penal provisions of Section 114A of the Customs Act would not be attracted. ....." (Emphasis supplied) 13.3. Thus, by following the ratio of the decision of the Tribunal in Jain Grani that the demand of customs duty confirmed in the impugned order is upheld, only for the normal period of limitation and consequently, the demand confirmed in the impugned order by invoking the extended period of limitation is set aside. 13.4. On this score, we also find that the learned Adjudicating authority has inter alia ordered to demand Customs duty under proviso to Section 28(1) read with B-17 bond furnished by the Appellant. It is a settled principle of law that demand can be raised for extended period only when the ingredients mentioned therein are present. The Bond executed by the appellant cannot be invoked to demand duty for extended period. In support of this view, we rely on the decision of the Tribunal in Commissioner of C. Ex., Pune-I vs. Emcure Pharmaceuticals Ltd, 2014 (307) E.L.T. 180 (T....
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.... Observations on Demand of Excise Duty: 14. Regarding the demand of central excise duty confirmed in the impugned order, we find that that the appellant, M/s. Abhishek Exports, have under taken the process of cutting the marble blocks. As per chapter Note 6 to Central Excise Tariff, in relation to products of CTH 2515 (marble etc) and 2516 (granite etc), the process of cutting or sawing or sizing or any other process, for converting of stone blocks into slabs or tiles shall not amount to 'manufacture' during the relevant period. Thus, the process of cutting the marbles into marble slabs/tiles undertaken by the appellant on the imported marble blocks does not amount to 'manufacture' as defined under Section 2(f) of the Central Excise Act, 1944. The Tribunal in Jain Grani has categorically held that the process of cutting, sawing or sizing under taken be the appellant does not amount to 'manufacture' and the decision has attained finality. The relevant extracts of decision dated 17.09.2009 of the Tribunal in Jain Grani with respect to the demand of central excise duty is as under: "5. Next point of dispute is as to whether the DTA clearances of the Dressed marble blocks ....
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....l goods under customs notification no. 52/03-Cus and its predecessor notification and excise duty free domestic procurement of indigenously manufactured inputs or capital goods for use in or in relation to "manufacture" (as defined in EXIM policy) of the finished goods; and (b) the DTA clearance attract central excise duty only under the proviso to Section 3 (1) of the Central Excise Act which would be attracted only if the activity of the EOU is "manufacture" within the meaning of this term as defined under Section 2(f) of the Act and as interpreted by various judgements of Hon'ble Supreme Court." (Emphasis supplied) 14.1. The ratio of the said decision cited supra is squarely applicable to the facts and circumstances of the present case. 14.2. The learned Special Counsel representing the Revenue tried to make a distinction between the definition of 'manufacture' available under section 2(f) of the Central Excise Act for the domestic units and the 100% EOU. He submitted that the EOU Scheme now encompasses activities such as packaging, processing and rendering services which in strict terms are not termed as 'manufacture' but a broader meaning of manufacture as gi....
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.... Thus the duty paid by the appellant for the clearances made to DTA cannot be considered as duty paid on account of wrong understanding. Thus, the decision of the Supreme Court in Mafatlal Industries cited by the learned Special Counsel of the Revenue is not applicable to the facts and circumstances of the present case. 15.2. The appellant has relied on various decisions in support of their claim that the central excise duty paid by the during DTA clearance can be adjusted against the customs liability liable to be confirmed. In the case of Nikhil Industries, the Tribunal has held that duty already paid by the EOU on the finished goods was adjustable against the duty leviable on the raw materials. The relevant part of the said decision is reproduced below for ready reference: "5. We have considered the submissions of both the sides. The undisputed facts are that the Appellants were granted letter of permission for manufacture and export of finished goods and they had accepted the terms and conditions and executed legal agreement also in terms of EXIM Policy. It is also not disputed that they have not exported any goods out of the raw material imported by them or by suin....
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....ted unit, and both Customs & Excise work is handled by the same Commissioner. As such, we find no reason why the same authority, who is in-charge of both the Excise & Customs work relating to the appellants' Unit, cannot order an adjustment in the payments, which have already been made. After all, the amounts have been paid to the Central Government under different heads and as explained by the learned Advocate appearing for the appellants, wrong payments were made for want of clarity regarding calculation of educational cess, which was clarified by the Board later on. 3. Considering the entire facts and circumstances of the case, we direct the jurisdictional Commissioner to make adjustment between the short payment and excess payment made by the appellants. As regards the balance amount after adjustment, the same may be considered for refund provided the appellants prefer a refund claim as required under the law." 15.4. We find that the above decision was affirmed by the Hon'ble Calcutta High Court in Commissioner vs. South Asian Petrochem Ltd, 2009 (233) E.L.T. A133 (Cal.). 15.5. Thus, in view of the aforesaid, it has been held that central excise duty paid by the ....