2009 (2) TMI 607 - AT - Central Excise

Summary

Issues:
Denial of benefit of Notification No. 2/95-C.E. for DTA clearances, demand of duty, imposition of penalty.

Analysis:
The judgment involves an appeal filed by M/s. Krishna Filaments Ltd. against the denial of the benefit of Notification No. 2/95-C.E. for DTA clearances, along with the challenge of duty demand and penalty imposition. The appellants, a 100% EOU, were permitted to sell 25% of the value of exports in India under the EXIM Policy 1997-2002. The dispute arose when the Department demanded duty from the assessee for clearances of HDPE/PP Yarns during a specific period, alleging wrongful availing of the Notification benefit. The Department contended that DTA sales against foreign exchange, counted towards export obligation fulfillment, did not qualify for the Notification benefit. The assessee argued that the clearances were made under Para 9.9(b) of the EXIM Policy, not under Para 9.10(b as claimed by the Revenue.

The central question in this case was the applicability of Notification 2/95-C.E. to the DTA clearances in question. The Revenue argued that the Notification did not apply to such clearances, contending they were not made under Para 9.9(b) of the EXIM Policy. However, the assessee asserted that the clearances were under Para 9.9(b) and not under Para 9.10(b as claimed by the Revenue. Reference was made to a Supreme Court case involving a similar issue where it was held that the benefit of the Notification should not be denied based on a new condition imposed by the Tribunal. The Supreme Court decision established that DTA sales against foreign exchange also fell under Para 9.9 and were entitled to the Notification's exemption.

In light of the Supreme Court's decision, the Tribunal accepted the appellant's plea that the DTA clearances were made under Para 9.9(b) of the EXIM Policy, thus attracting the concession under Notification No. 2/95-C.E. The Tribunal set aside the impugned order and remanded the matter to the Commissioner for re-quantification of duty, subject to fulfilling the mandatory conditions of the Notification. The Commissioner was directed to provide the party with a reasonable opportunity to be heard. Consequently, the appeal was allowed by way of remand.