2007 (8) TMI 33 - SC - Customs

Demand - Department were demanded custom duty along with interest and penalty on the clearance of Polyester Textile from an 100% EOU to DTA - Held that there is only arises question of excise not of custom and accordingly demand not maintainable as well as barred by limitation

Summary

Issues:
1. Classification of duty as excise duty or customs duty for a 100% export-oriented unit.
2. Validity of the show cause notice issued by the Commissioner.
3. Interpretation of relevant provisions in the Central Excise Act, 1944.
4. Applicability of judgments in similar cases to the current matter.
5. Limitation period for recovery of excise duty.

Analysis:
1. The primary issue in this case was the classification of duty for a 100% export-oriented unit. The assessee contended that duty for clearance in the Domestic Tariff Area should be excise duty, not customs duty. The Tribunal agreed with this argument, emphasizing that the duty in question was indeed excise duty, as evidenced by investigations under the Central Excise Act, 1944. Consequently, the show cause notice was deemed defective in law, rendering the demand for payment unjustifiable.

2. The validity of the show cause notice issued by the Commissioner was a crucial point of contention. The Tribunal found that the notice was defective due to incorrectly categorizing the duty as customs duty instead of excise duty. This defect in the notice led to the conclusion that the demand based on it was not maintainable. The Tribunal's decision was supported by legal precedents and the interpretation of relevant provisions of the law.

3. The judgment referred to a Division Bench decision in a related case to support its findings. The Division Bench highlighted the importance of adherence to the grounds raised by the Revenue in the show cause notice and subsequent orders. It emphasized that the Tribunal cannot introduce new grounds beyond those raised by the Revenue. This principle was crucial in determining the validity of the show cause notice and subsequent proceedings in the present case.

4. The applicability of judgments in similar cases played a significant role in the final decision. Citing the decision in Saci Allied Products Ltd., the Court found no merit in the Civil Appeals filed by the Department. The dismissal of the appeals was based on the precedent set by previous judgments and the specific circumstances of the case at hand.

5. Finally, the issue of the limitation period for the recovery of excise duty was addressed. The Court noted that the period in question fell outside the scope for granting permission to the Department to recover duty as excise duty. Due to the limitation period from 24-1-2000 to 27-2-2000, the Court concluded that there was no possibility of granting permission for the recovery of duty in that specific context.