2005 (12) TMI 429 - AT - Central Excise

Summary

Issues:
- Classification of prawn seed for duty payment
- Applicability of Notification No. 196/94-Cus.
- Demand of duty on inputs beyond scope of show cause notice
- Violation of duty exemption and confiscation of goods
- Imposition of penalties
- Demand of Central Excise Duty

Classification of Prawn Seed for Duty Payment:
The appellants, registered under the EOU scheme, cleared shrimp seeds to DTA without duty payment. The Revenue contended that customs duty should have been paid on the seeds. The Commissioner demanded duty on imported inputs and raw materials used in production. The appellants argued that prawn seed is excisable under Chapter 3 of the Central Excise Tariff Act, attracting a duty rate of NIL. They challenged the demand for duty on inputs beyond the scope of the show cause notice, emphasizing that the Commissioner's conclusion was illegal.

Applicability of Notification No. 196/94-Cus.:
The appellants contested the application of Condition No. 6 of Notification No. 196/94-Cus., stating that it pertains to goods produced in EOU not exported, which did not include prawn seeds. They argued that the condition did not cover products like prawn seeds, which were not exported.

Demand of Duty on Inputs Beyond Scope of Show Cause Notice:
The Commissioner demanded duty on imported inputs used in prawn seed production, which was beyond the scope of the show cause notice. The Tribunal noted that the demand for duty on inputs, raw materials, and consumables imported in relation to prawn seeds cleared to DTA exceeded the initial demand on prawn seeds themselves, rendering the adjudication order unsustainable.

Violation of Duty Exemption and Confiscation of Goods:
The Commissioner alleged a violation of duty exemption and confiscated goods based on unauthorized clearance to DTA without specific permission. The appellants refuted this claim, citing early permission granted to sell prawn seeds in DTA. They argued that penalties imposed were unwarranted due to the granted permissions.

Imposition of Penalties:
The Commissioner imposed penalties under the Customs Act for alleged irregular utilization of imported inputs. The Tribunal considered the penalties unjustified, taking into account prevalent issues in aqua culture units at that time, and subsequently dropped the penalties imposed.

Demand of Central Excise Duty:
Regarding the demand of Central Excise Duty on inputs used in prawn seed production, the Tribunal upheld the demand based on the Commissioner's reasoning and the applicable proviso of Notification No. 10/95-CE. The appellants did not address this point in their grounds of appeal, leading to the Tribunal's decision to uphold the demand.

In conclusion, the Tribunal set aside the Customs duties demanded on imported inputs, raw materials, and consumables, along with all penalties imposed. However, the levy of excise duty in Order-in-Original No. 1/04 was upheld. The appeals were disposed of accordingly.