2011 (5) TMI 522 - AT - Central Excise

Procurement of duty free capital goods/ parts in terms of Notification No.22/03 CE dated 31.3.03 denied - Held that - As it appears that the permission was granted by the Assistant Commissioner vide F.No.VII/CUS/STP/26/03 dated 6.10.03 to M/s. MTDCC for procurement of indigenous Capital goods/parts subject to fulfillment of conditions stipulated vide Notification No.22/2003-CE dated 31/03/2003, but it was observed that they did not fulfill the condition as stipulated vide Notification 22/03 dated 31-3-2003 in as much as they were not engaged in any manufacture, processing, packaging and export of software/hardware or service - Decided against of assessee. Demand of duty - Limitation - Held that - Revenue held that there is no time limit when demand is raised for non fulfillment of conditions accepted in the bond executed - find that the decision of the Tribunal in the case of Endress Hauser Flowtec (I) Pvt.Ltd. 2008 (11) TMI 159 - CESTAT, MUMBAI is applicable as far as this aspect is considered - Decided against the assessee.

Summary

Issues:
1. Eligibility for duty-free capital goods under Notification No. 22/03-CE.
2. Validity of invoking the extended period for duty demand.

Analysis:

Issue 1:
The case involved M/s. Magarpatta Township Development & Construction Co.Ltd. (MTDCC) procuring capital goods under Notification No. 22/03-CE but facing a demand for duty amounting to Rs. 1,85,23,320. The Revenue contended that MTDCC, as infrastructure providers to STP units, was not eligible for duty-free capital goods under the notification. The crux of the matter was whether MTDCC qualified for the benefits of the notification. The advocate for MTDCC argued that the goods procured were brought in connection with the manufacture or development of software, making them eligible for exemption under the notification. However, the Revenue argued that the exemption was limited to units in STP or 100% EOU. The Tribunal found that accepting MTDCC's interpretation would render the notification ineffective, as it would allow goods to be procured without fulfilling required conditions. Additionally, the Tribunal noted that MTDCC did not own the units utilizing the capital goods, as required by the notification, leading to a rejection of MTDCC's claim for exemption.

Issue 2:
The second issue revolved around the validity of invoking the extended period for duty demand. MTDCC argued against the invocation, claiming no suppression or misdeclaration. However, the Revenue pointed out instances where MTDCC misrepresented themselves as a 100% EOU, which was not the case. The Tribunal highlighted that misdeclaration or suppression of facts leads to the invocation of the extended period, as per Sec.11AC of the Central Excise Act, 1944. The show-cause notice contained clear allegations of misdeclaration by MTDCC, leading to the conclusion that they deliberately provided false information. The Tribunal emphasized that the declaration made by the appellant must be accepted, even if the department could have verified the information from other records. Ultimately, the Tribunal found no merit in MTDCC's appeal, rejecting it based on the failure to establish eligibility for exemption and the validity of invoking the extended time limit for duty demand.

In conclusion, the Tribunal upheld the duty demand against MTDCC, emphasizing the importance of accurate declarations and compliance with notification conditions to avail of duty exemptions.