2010 (7) TMI 440 - AT - Central Excise

Export oriented undertakings, 100% EOU DTA clearance under permission from Development Commissioner in terms of para 9.9(e) of EXIM Policy 1997-2002 - letters very clearly mentioned that the EOU should pay full duties and taxes on clearances made in terms specified - assessee admitted in its reply to the Commissioner that it was not entitled to make DTA clearances availing Notification No. 8/97-C.E. and paying only the applicable central excise duty accordingly - appellant not only did not seek permission under para 9.9(b) in time nor sought necessary amendment of the permission letter when the Development Commissioner had issued three such letters of permission - claim for benefit under Notification No. 2/95-C.E. extending concessional rate of 50% of the aggregate duties of customs payable for such goods when imported is also not admissible as per the assessee itself when the goods are cleared under para 9.9(e) of the Exim Policy - Commissioner rightly confirmed the impugned demand along with applicable interest. The matter is remanded to the Commissioner for determining the duty liability of the assessee after allowing the cum-duty benefit to the impugned clearances. Needless to say that the assessee shall be heard before the matter is adjudicated afresh. Appeal is thus allowed by way of remand. - Penalty waived.

Issues:
1. Interpretation of permissions granted by Development Commissioner for DTA clearances under Exim Policy.
2. Eligibility of the appellant for benefit under Notification No. 8/97-C.E. for clearances made under Exim Policy.
3. Claim for cum-duty benefit and its denial by the Commissioner.
4. Imposition of penalties on the appellant and Managing Director for alleged violations.

Interpretation of Permissions:
The Tribunal analyzed the permissions granted by the Development Commissioner for DTA clearances under the Exim Policy. The appellant argued that the permissions wrongly mentioned para 9.9(e) instead of para 9.9(b) of the policy. However, the Tribunal found that the Development Commissioner had applied provisions of para 9.9(b) while issuing the permissions, despite the reference to para 9.9(e). The Tribunal concluded that the permissions were correctly issued under para 9.9(b) of the Exim Policy.

Eligibility for Benefit under Notification No. 8/97-C.E.:
The Tribunal examined the appellant's eligibility for benefit under Notification No. 8/97-C.E. for clearances made under the Exim Policy. The appellant admitted that they were not entitled to make DTA clearances availing this notification. The Tribunal noted that the appellant did not seek permission specifically under para 9.9(b) of the policy, and thus, could not claim the benefit of Notification No. 8/97-C.E. The Commissioner's decision to confirm the demand along with interest was upheld.

Claim for Cum-Duty Benefit:
Regarding the claim for cum-duty benefit denied by the Commissioner, the Tribunal found merit in the appellant's argument. They believed that the assessable value should be worked out from the cum-duty sale price to determine the correct duty liability. The matter was remanded to the Commissioner for reconsideration and proper calculation of duty liability. The Tribunal emphasized that no penalty could be imposed on the appellant as there was no evidence of dishonest conduct or violation of statutory provisions.

Imposition of Penalties:
The Tribunal assessed the imposition of penalties on the appellant and the Managing Director for alleged violations. It was found that the appellant and the Department believed they were complying with statutory provisions. Citing the Hindustan Steel Ltd. case, the Tribunal ruled that penalties could not be imposed without evidence of dishonest conduct. Therefore, the penalties imposed on the appellant were vacated. The Managing Director's penalty was also set aside as no mala fide intent was attributed to him, and the Department did not object to the clearances at the time.

In conclusion, the Tribunal allowed the appeal by remanding the matter to the Commissioner for determining the duty liability after allowing the cum-duty benefit. The penalties imposed on the appellant and the Managing Director were deemed unsustainable and set aside.

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