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2013 (6) TMI 676 - AT - Central ExciseBenefit of Notification No. 23/2003-C.E., dated 31-3-2003 as amended by Notification No. 22/2006-C.E., dated 1-3-2006 - Whether the appellants are entitled for the benefit of Notification No. 23/2003, dated 31-3-2003 as amended - Held that - The benefit of the notification is available after fulfilling the condition No. 1 of the said notification - Tribunal held that the appellant has availed special exemption granted by the State of U.P. in respect of clearance made to DTA within U.P. only and are paying sales tax in respect of clearance made to some of the States. In other words, part of the clearances are not suffering sales tax while rest of the clearances are subject to sales tax/VAT. The Larger Bench of the Tribunal held that in respect of a 100% EOU availing sales tax exemption for determining the excise duty payable based on aggregate value of customs duty, the element of SAD should be taken into account. Therefore, on merits the appellants are not having any case. Appellant has declared to the department before the first clearance of the tractor that the appellants are availing the benefit of Notification 23/2003 which was well within the knowledge of the department. Therefore, the appellants cannot be accused of having suppressed the fact of availing the benefit of Notification 23/2003 without considering the SAD while determining the assessable value. Therefore, extended period of limitation is not invocable in the facts of this case. Accordingly, the demand, beyond the normal period of limitation is set aside. As the allegation of suppression is not sustainable therefore, following the decision of Rajasthan Spinning & Weaving Mills (2009 (5) TMI 15 - SUPREME COURT OF INDIA), penalty imposed under Section 11AC is also not sustainable. Admittedly, the appellant is availing the benefit of exemption from payment of whole of Sales Tax/VAT in respect of its sales of Agricultural Tractors and parts thereof by virtue of the above mentioned order dated 1-4-2005. Consequently, the appellant is not eligible for the benefit of the Notification No. 23/2003-C.E., dated 31-3-2003 - Decided partly in favour of assessee.
Issues Involved:
1. Eligibility for the benefit of Notification No. 23/2003-C.E. 2. Compliance with Condition No. 1 of Notification No. 23/2003-C.E. 3. Limitation period for demand of differential duty. 4. Quantification of differential duty. 5. Applicability of penalties under Section 11AC. Detailed Analysis: 1. Eligibility for the benefit of Notification No. 23/2003-C.E.: The primary issue was whether the appellant, a 100% EOU engaged in manufacturing tractors and parts, was entitled to the benefit of Notification No. 23/2003-C.E., as amended. The notification provides an exemption from Special Additional Duty (SAD) for DTA clearances, provided certain conditions are met. The appellant argued that their goods were not exempt from VAT under the Maharashtra Value Added Tax Act (MVAT Act), and thus, they were entitled to the exemption. However, it was found that the appellant availed a sales tax exemption granted by the State Government, which disqualified them from the benefits under the notification. 2. Compliance with Condition No. 1 of Notification No. 23/2003-C.E.: Condition No. 1 of the notification states that the exemption is available only if the goods cleared into the DTA are not exempted by the State Government from payment of sales tax or VAT. The appellant contended that their goods were not tax-free under Section 2(30) of the MVAT Act, and thus, they complied with the condition. However, it was established that the exemption granted to their unit under the Package Scheme of Incentives by the Maharashtra Government did indeed exempt them from VAT, disqualifying them from the notification's benefits. 3. Limitation period for demand of differential duty: The appellant argued that the demand for the period from April 2007 to April 2010 was barred by limitation. They had informed the authorities about their VAT exemption and non-payment of SAD through a letter dated 12-3-2007. The Tribunal found that the department was aware of the appellant's exemption status from the first clearance, and thus, the extended period of limitation could not be invoked. Therefore, the demand for the period beyond the normal limitation period was set aside. 4. Quantification of differential duty: The appellant disputed the quantification of the demand, arguing that the assessable value should be treated as cum-duty price since they did not recover any amount over the invoice value. The Tribunal agreed and remanded the matter back to the adjudicating authority for recomputation of the duty demand, considering the cum-duty price for the normal period of limitation. 5. Applicability of penalties under Section 11AC: Given that the extended period of limitation was not applicable, the Tribunal found that there was no suppression of facts or mis-declaration by the appellant. Consequently, the penalty imposed under Section 11AC was deemed unsustainable. The Tribunal followed the precedent set by the Supreme Court in Rajasthan Spinning & Weaving Mills, which held that penalties under Section 11AC require a finding of suppression or mis-declaration. Conclusion: The Tribunal concluded that the appellant was not entitled to the benefits of Notification No. 23/2003-C.E. due to their exemption from VAT. The demand for the normal period was confirmed, but the extended period was set aside due to the department's prior knowledge of the appellant's exemption status. The case was remanded for recomputation of the duty demand, and the penalties were annulled.
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