2008 (6) TMI 513 - AT - Central Excise

Summary

Issues involved: Challenge to confirmation of demand and penalty u/s Order-in-Appeal No. 06/2007 - CE dated 23-2-2007, for recovery of duty on goods manufactured in E.O.U. premises and cleared in DTA unit. Contention regarding exemption, permission for conversion to 100% EOU, utilization of common facilities, time bar, and duty liability.

Confirmation of demand and penalty:
The appeal contested the confirmation of demand and penalty imposed by the Commissioner of Customs & Central Excise, Hyderabad. The appellants, engaged in manufacturing Solar Photovoltaic Modules and Systems, argued that they are not liable to pay duty due to partial utilization of EOU premises being exempted. They relied on relevant legal precedents and guidelines, asserting that the demands are time-barred. The appellant's position was that duty liability does not arise for clearances made through DTA for partial utilization of EOU premises as per Board's Circular No. 38/95-Cus. The submission highlighted compliance with guidelines, completion of export obligations, and de-bonding of premises. It was argued that duty confirmation was unlawful due to no suppression of facts and non-invocation of the extended period, thus penalty imposition was unwarranted.

Utilization of common facilities:
The Department contended that the assessee cannot use common facilities for DTA clearances, supporting the Commissioner's findings. However, the Tribunal examined Board's Circular No. 38/95 dated 17-5-1995, which permits partial conversion of DTA unit to 100% EOU/EHTP/STP units utilizing common facilities. The Circular was found to have been followed by the assessee, as confirmed by the Development Commissioner and Asst. Development Commissioner. Notably, the Tribunal cited a previous judgment where a similar demand was set aside based on the non-applicability of certain conditions and the fundamental flaw in the Show Cause Notice. Consequently, the Tribunal ruled in favor of the appellant, setting aside the demand and penalty, citing the demand as time-barred and the confirmation of demand as not in accordance with the law.