2014 (9) TMI 1056 - AT - Central Excise

100% EOU - goods cleared in DTA to its own unit - stock transfer - Demand of SAD - Held that - the ratio of the decision of this Bench in the case of M/s Micro Inks Vs. CCE, Daman 2014 (2) TMI 207 - CESTAT AHMEDABAD squarely settles the law in so far as this point. Therefore, the demand of SAD on goods cleared to its own DTA Unit does not survive, accordingly, we do not find any merit in appeal of the revenue. Differential demand of CVD and imposition of penalty - Invokation of extended period of limitation - Held that - as we find no allegations for demand has been stated either in the show cause notice nor there are any reasoning in the impugned orders for confirmation of such demand, we are of the considered view that such demand cannot be confirmed as it is not in accordance with law. As regard plea of revenue neutrality raised by the appellant, we find strong force in the contentions as there is no dispute that clearances were made by M/s STI to their own DTA Unit and the credit of SAD and CVD was available to the DTA Unit, hence the entire issue is revenue neutral. In such case it cannot be said that there has been intentional evasion of payment of duty by the appellant-assessee. It is found that the goods were cleared on invoices indicating all the particulars and we do not find any deliberate act on the part of the assessee to evade payment of duty. We are of the view that the demands raised by invoking extended period of limitation on this count are not invokable. Therefore, the demand of SAD and CVD is unsustainable. However in respect of demand of CVD, based upon our above findings we hold that only the demand falling under normal period of limitation is sustainable, we hold it so. Since the most of the demand is set aside, having held that there was no intention to evade duty, we find that penalties imposed are unwarranted and they are set aside. Appeals disposed of

Summary

Issues:
- Demand of Special Additional Duty (SAD) on goods cleared to own DTA unit
- Demand of Central Value Added Tax (CVD) on the same goods
- Validity of demands raised by invoking extended period of limitation
- Imposition of interest and penalty under relevant sections of the Central Excise Act, 1944

Analysis:
1. Demand of SAD on goods cleared to own DTA unit:
- The issue revolved around whether M/s STI Industries, a 100% Export oriented unit, was liable to pay SAD on goods cleared to its own DTA unit. The Appellate Tribunal referred to previous judgments favoring the assessee and held that the demand of SAD was not sustainable. The Tribunal found that the demand did not survive, dismissing the appeal of the revenue.

2. Demand of CVD on the same goods:
- The Tribunal noted that the demand of CVD was confirmed without proper reasoning or allegations in the show cause notice or the impugned order. As a result, the Tribunal held that the demand of CVD was not in accordance with the law and could not be confirmed. The Tribunal also considered the argument of revenue neutrality, stating that since the goods were cleared to their own DTA unit with credit available, intentional evasion of duty was not present. Therefore, the demands raised by invoking the extended period of limitation were deemed unsustainable.

3. Validity of demands raised by invoking extended period of limitation:
- The Tribunal found that the demands of SAD and CVD were unsustainable due to the lack of intentional evasion of duty by the appellant-assessee. It was observed that the goods were cleared with proper documentation, indicating no deliberate attempt to evade duty. Consequently, the demands raised by invoking the extended period of limitation were deemed not invokable.

4. Imposition of interest and penalty:
- Since the Tribunal held that the demands of SAD and CVD were unsustainable, penalties imposed under Section 11AC were set aside. The Tribunal found that most of the demand being set aside indicated no intention to evade duty, leading to the penalties being deemed unwarranted and subsequently set aside.

In conclusion, the Tribunal dismissed the appeal filed by the revenue and allowed the appeal filed by M/s STI to the extent that the demands of CVD raised by invoking the extended period of limitation were not sustainable, and only the demand of CVD under the normal period would survive. The penalties imposed under Section 11AC were also set aside. Both appeals were disposed of accordingly, and cross objections filed by the assessee were also disposed of.