2009 (10) TMI 822 - AT - Central Excise

Summary

Issues involved: Appeal against demand u/s 11A of Central Excise Act, imposition of penalties u/s 11AB and Rule 209 of Central Excise Rules, 1944.

Summary:
1. The appeal was filed by M/s Saritha Software and Industries Ltd. against the demand of Rs. 5,87,560/- u/s 11A of the Central Excise Act, penalties imposed, and interest under Section 11AB. The Commissioner (Appeals) affirmed the demand and penalties ordered by the original authority.

2. The appellants, a 100% EOU, exported goods through a merchant exporter under AR-4s, but the export under DEPB shipping bills was found in violation of the EOU scheme. The original authority confirmed the demand and penalties, rejecting the contention that the merchant exporter did not avail DEPB Scheme benefits.

3. Grounds raised by the appellants included denial of EOU benefits due to the merchant exporter's actions, proper documentation of consignments, and the contention that the export benefits should be recovered from the merchant exporter.

4. The Tribunal noted the conditions for exporting through a merchant exporter as per the Export-Import Policy and Handbook of Procedures. The impugned exports violated these conditions, leading to the denial of export incentives under the DEPB scheme.

5. The merchant exporter clarified that they did not claim any export benefits for the consignments in question, but the Commissioner ignored this information. The impugned order related to the liability of the appellant EOU for non-compliance with the EOU scheme conditions.

6. The Tribunal highlighted CBEC Circulars requiring a definite conclusion on EOU liability by the Development Commissioner before demanding duty. The impugned order demanding duty was held unsustainable as it contravened the Circulars.

7. The Tribunal found that the appellant took sufficient safeguards against the merchant exporter availing undue benefits. The EOU's compliance with statutory provisions is monitored by the Development Commissioner, and demanding duty without consensus on liability is premature. The impugned demand was vacated, and the appeal was allowed.