2006 (3) TMI 58 - AT - Central Excise

SAD and Demand (Customs)- Appellant were demanded differential duty of Excise; SAD on DTA clearance on the cases alleged on it- Authority after considering all the factor allow the appeal with consequential relief.

Summary

Issues:
1. Levy of Special Additional Duty on DTA clearances by EOU.
2. Exemption of SAD under Notification No. 22/99-Cus.
3. Confirmation of Basic Customs Duty and CVD on clearances to DTA.
4. Limitation period for raising demands of duty.
5. Quantification of duty on yarn cleared to DTA and other issues during re-adjudication.

Issue 1:
The Appellate Tribunal addressed the levy of Special Additional Duty (SAD) on DTA clearances by an EOU. The Commissioner held that the noticee was liable for SAD as it was not covered under the provisions of the Customs Tariff Act 1975. The Commissioner rejected the contention that the noticee's payment of sales tax in a backward area location exempted them from SAD. The Tribunal set aside the confirmation of SAD, citing that the noticee's situation did not warrant the levy of SAD, as they were not paying sales tax.

Issue 2:
The Tribunal considered the exemption claim of SAD under Notification No. 22/99-Cus. The assessee argued for full exemption of SAD under specific notifications, which the Commissioner did not uphold. The Tribunal disagreed with the Commissioner's decision and set aside the confirmation of SAD, stating that the appellant's non-payment of sales tax meant that SAD could not be levied. The Tribunal referenced previous judgments to support its decision.

Issue 3:
Regarding the confirmation of Basic Customs Duty and CVD on clearances to DTA, the Commissioner confirmed these duties based on the lack of contestation by the appellants. However, the Tribunal found that the demands were contested by the appellants, and thus remanded the matter back to the Commissioner for re-adjudication after considering the appellants' replies.

Issue 4:
The Tribunal addressed the limitation period for raising demands of duty, noting that the demands beyond the normal period of limitation were set aside as the clearances were made under invoices without any intention to evade payment. The Tribunal also held that no penalty could be imposed on the appellant due to the bona fide interpretation of notification provisions.

Issue 5:
The appellants raised concerns about the quantification of duty on yarn cleared to DTA and other issues during re-adjudication. The Tribunal granted the appellants the liberty to raise these issues during the re-adjudication process. In conclusion, the Tribunal set aside the confirmation of SAD, remanded the matter of Basic Customs Duty and CVD, set aside demands beyond the limitation period, and penalties imposed on the appellants. The appellants were allowed to raise quantification and other defenses during the re-adjudication proceedings.