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2013 (3) TMI 306 - AT - CustomsNon-discharge of duty liability on the inputs consumed for manufacturing of LPG and cleared by availing the benefit of exemption notification No. 21/2002-Cus. and Notification No. 4/2006-Central Excise - appellant herein being 100% EOU - appellant contested the show cause notice on merits of the case as well as on limitation - whether the appellant had made themselves liable for penalty under the provisions of Section 114A of Customs Act, 1962 and Section 11AC of Central Excise Act, 1944? - Held that - It is noted that the inputs which were procured by the appellant, were consumed in an EOU, after filing in-bond bills of entry or documents like re-warehousing certificate. These documents are not disputed by the Revenue. This would mean that the goods imported or procured locally, were warehoused in the appellant s licensed warehouse and it is admitted that inputs were not cleared as such but were consumed. At this juncture it is to note and record that, in a similar issue in the case of Paras Fab International (2010 (6) TMI 184 - CESTAT, NEW DELHI) has ruled that no duty requires to be paid if inputs are consumed that in an EOU, as it is treated as warehouse. Fine distinction drawn between private bonded house and 100% EOU are of no help to the Revenue, inasmuch as the issue on the said dispute stands answered by the Larger Bench in the case of Paras Fab International (Supra) which even Shri Mondal has also not denied. Further, the fact of payment of duty at the time of filing bill of entry for warehouse Under Protest will also not change the legal position that 100% EOU is required to pay duty only at the time of clearances of warehoused goods for home consumption. Thus the above ratio would apply in full force to the case in hand, as it is undisputed that the inputs procured by appellant, on which department has foregone duty, was consumed in the EOU for manufacturing of LPG and said LPG was sold to Public Sector Units. There is no allegation of removal of inputs as such in the entire case records. In the case in hand, it is undisputed that appellant themselves has discharged the duty foregone along with interest, on their own. There was no intimation or letter from departmental authorities directing them to do so. Thus the action of the appellant in keeping informed the departmental authorities about the availment of exemption notification for LPG, filing returns by the appellant who is an EOU, would mean that they had no intention to suppress material facts. This fact of filing returns indicating entire transactions of EOU is not disputed by Revenue authorities. Thus there was no need to issue any show cause notice to appellant as the duty liability either Customs or Central Excise is the same as has been calculated by the appellant & consequently authorities have no authority to initiate proceedings for recovery of penalty See COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX Versus M/s ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD 2011 (9) TMI 114 - KARNATAKA HIGH COURT Thus the adjudicating authority has committed an error, in invoking the provisions of Section 114A of the Customs Act, 1962 and Section 11AC of the Central Excise Act, 1944 for imposition equivalent amount of penalties as indicated in his order as appellant had definitely not suppressed any material information from the department as regards the consumption of inputs procured, on which the duty liability was forgone by the Revenue and as also clearance of final products to DTA- in favour of assessee.
Issues Involved:
1. Liability for Customs and Central Excise duties on inputs used for manufacturing LPG cleared in the Domestic Tariff Area (DTA). 2. Eligibility for exemption under specific notifications. 3. Applicability of penalties under Section 114A of the Customs Act, 1962, and Section 11AC of the Central Excise Act, 1944. 4. Validity of show cause notice under Section 28(2B) of the Customs Act, 1962, and Section 11A(2B) of the Central Excise Act, 1944. 5. Extended period of limitation for demand of duties. Detailed Analysis: 1. Liability for Customs and Central Excise Duties: The appellant, a 100% Export Oriented Unit (EOU), imported inputs without paying customs or central excise duties under various notifications. The inputs were used to manufacture Liquefied Petroleum Gas (LPG), which was cleared in the Domestic Tariff Area (DTA) without payment of duty. The adjudicating authority confirmed the demand for customs and central excise duties, along with interest and penalties, on the grounds that the appellant availed exemptions and cleared LPG in the DTA without paying the duties forgone on the inputs. 2. Eligibility for Exemption: The appellant argued that the LPG manufactured and cleared to Public Sector Units (PSUs) under a subsidy scheme was exempt from customs duty under Notification No. 21/2002-Cus. and central excise duty under Notification No. 4/2006-C.E. The appellant contended that the supplies to PSUs should be considered for fulfilling positive net foreign exchange (NFE) and should be eligible for exemption as per Paragraph 6.9(c) of the Foreign Trade Policy. 3. Applicability of Penalties: The appellant paid the duties and interest voluntarily before the issuance of the show cause notice, invoking Section 28(2B) of the Customs Act, 1962, and Section 11A(2B) of the Central Excise Act, 1944, which provide for non-imposition of penalties if the duty and interest are paid before the issuance of the notice. The adjudicating authority, however, imposed penalties under Section 114A of the Customs Act, 1962, and Section 11AC of the Central Excise Act, 1944. 4. Validity of Show Cause Notice: The appellant argued that the show cause notice should not have been issued as they had already paid the duties and interest voluntarily and informed the department. The Tribunal noted that the appellant had filed regular returns and informed the department about the clearances, indicating no intention to evade duty. The Tribunal referred to the Karnataka High Court's decision in ADECCO Flexione Workforce Solutions Limited, which held that no notice should be issued if the duty and interest are paid voluntarily. 5. Extended Period of Limitation: The Tribunal found that there was no suppression of facts or intention to evade duty by the appellant. The appellant had informed the department about the clearances and paid the duties voluntarily. The Tribunal concluded that the extended period of limitation could not be invoked, and the show cause notice was not justified. Conclusion: The Tribunal set aside the penalties imposed by the adjudicating authority, holding that the appellant had not suppressed any material facts and had voluntarily paid the duties and interest. The Tribunal found that the issuance of the show cause notice was incorrect, and the extended period of limitation could not be invoked. The appeals were allowed to the extent of setting aside the penalties under the Customs Act, 1962, and the Central Excise Act, 1944.
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