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2006 (7) TMI 404 - AT - Central ExciseEXIM-EOU, 100% EOU - Confiscation and penalty - Valuation - Cum-duty price - Demand, confiscation and penalty - Words and Phrases
Issues Involved:
1. Levy of Central Excise Duty on clandestinely removed goods. 2. Shortage of hosiery knitted fabrics. 3. Job work conducted without proper permission. 4. Penalties imposed under Rule 209A of the Central Excise Rules, 1944. 5. Applicability of the proviso to Section 3(1) of the Central Excise Act, 1944. 6. Confiscation and penalties under Rule 173Q and Rule 209. 7. Calculation of duty on capital goods without allowing depreciation. Detailed Analysis: 1. Levy of Central Excise Duty on Clandestinely Removed Goods: The appellant-company was found to have clandestinely removed hosiery knitted fabrics worth Rs. 5,84,77,936/- into the Domestic Tariff Area (DTA) without paying the leviable duty. The Central Excise duty on these goods was assessed under the proviso to Section 3(1) of the Central Excise Act, 1944, which mandates that the duty should be equal to the aggregate of the customs duties that would be payable if the goods were imported into India. The Tribunal upheld this assessment, noting that the goods were removed without the necessary permissions and thus, the proviso to Section 3(1) was applicable. 2. Shortage of Hosiery Knitted Fabrics: A shortage of 49275.32 kgs. of hosiery knitted fabrics was found during a physical stock verification. The appellant admitted that these goods were sold in the open market without payment of duty. The Tribunal confirmed the duty demand on these goods as per the proviso to Section 3(1). 3. Job Work Conducted Without Proper Permission: The appellant-company conducted job work for domestic parties without obtaining the required permissions from the Central Excise authorities. The revenue determined that the fabrics processed on job work basis were valued at Rs. 32,02,32,192/-. The Tribunal held that the job work amounted to manufacture and the duty was correctly assessed under the proviso to Section 3(1). 4. Penalties Imposed Under Rule 209A: The Commissioner imposed a penalty of Rs. Seven Crores on the Chairman Managing Director under Rule 209A of the Central Excise Rules, 1944 read with Section 38A of the Act. The Tribunal upheld this penalty, noting that the clandestine removal and job work without permission were deliberate acts to evade duty. 5. Applicability of the Proviso to Section 3(1): The appellant contended that the proviso to Section 3(1) could not be invoked as the goods were not allowed to be sold in India. The Tribunal rejected this argument, stating that the proviso applies to goods produced by 100% EOUs and removed into the DTA without permission. The Tribunal also noted that the notifications providing concessional rates of duty were applicable only to goods allowed to be sold in India as per the EXIM Policy. 6. Confiscation and Penalties Under Rule 173Q and Rule 209: The Tribunal addressed the issue of wrong mention of Rule 173Q instead of Rule 209. It held that the substance of the allegations and the nature of the contraventions were clear and understood by the appellant. Therefore, the mere wrong mention of the rule did not vitiate the proceedings. The Tribunal upheld the confiscation and penalties imposed by the Commissioner. 7. Calculation of Duty on Capital Goods Without Allowing Depreciation: The appellant contended that the duty on capital goods should be calculated on the depreciated value. The Tribunal rejected this argument, noting that depreciation could only be considered if the goods were allowed to be removed with proper permission, which was not the case here. The Tribunal upheld the duty demand and penalties on the capital goods. Conclusion: The Tribunal dismissed all four appeals, upholding the duty demands, confiscations, and penalties imposed by the Commissioner. The Tribunal found that the appellant-company had deliberately evaded duty by clandestinely removing goods and conducting job work without permission, and had violated the provisions of the EXIM Policy and the Central Excise Rules.
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