2009 (2) TMI 653 - AT - Central Excise

EXIM - National Calamity Contingency Duty - POY cleared to other 100% EOU - demand on the ground that such clearances has to be treated as deemed export and inasmuch as the same was not physically export.

Summary

Issues:
1. National Calamity Contingency Duty (NCCD) on POY cleared to 100% EOU.
2. NCCD on POY cleared to job workers.
3. Imposition and reduction of penalties.

Analysis:

Issue 1: NCCD on POY cleared to 100% EOU
The appellant, engaged in manufacturing POY, faced a dispute regarding the NCCD imposed on POY cleared to other 100% EOU. The Tribunal referred to a previous case involving M/s. Modern Petrofils Ltd. where it was held that NCCD is not leviable on goods cleared to 100% EOU. Relying on this precedent, the Tribunal ruled in favor of the appellant, setting aside the demand of duty amounting to Rs. 6,73,288.

Issue 2: NCCD on POY cleared to job workers
Another demand of Rs. 10,39,624 as NCCD was confirmed against the appellant for POY cleared to job workers. The appellant acknowledged the demand but explained that they had stopped paying NCCD on POY under the belief that it was not required after the texturised yarn became exempt. The appellant promptly paid the duty upon realizing the mistake. The Tribunal found merit in the appellant's argument, noting the absence of any malafide intent and the proper documentation of POY sent to job workers. Consequently, the demand and penalty of Rs. 5 lakhs were set aside.

Issue 3: Imposition and reduction of penalties
The penalties of Rs. 5 lakhs and Rs. 25,000 imposed on the appellant and the General Manager, respectively, were deemed unwarranted in light of the circumstances. Given the appellant's genuine belief and prompt payment upon notification, the Tribunal set aside both penalties.

In conclusion, both appeals were disposed of in favor of the appellant, with the demands and penalties being set aside based on the Tribunal's analysis of the NCCD applicability and the appellant's actions in good faith.