2014 (2) TMI 916 - AT - Central Excise

100% EOU - Clearance of non-duty paid goods to DTA - Extended period of limitation - Imposition of interest and penalty - Appellants were working under Notification 1/95-CE dated 1.4.1995 and procuring the raw material without payment of duty on the condition that the same is used in the manufacture of goods exported - Held that - statutory records maintained by the appellants show the use of the raw material procured without payment of duty for intended use. However, the detailed investigation was conducted from various transporters as well as buyers, which shows that in fact the raw material which was procured without payment of duty was cleared clandestinely to DTA. The documents prepared by the appellants were found to be fake and ultimately in the year 2006, the evidence collected was put to the proprietors and they admitted the clandestine clearance of the goods without payment of duty and thereafter the show cause notices were issued within five years hence the ratio of the above decisions relied upon by the Revenue are fully applicable on the facts of the present case. As the appellants are not disputing the demands on merits before the adjudicating authority nor in the present appeals, therefore we find no merit in the contention of the appellants that the demands are time barred - Decided against assessee.

Summary

Issues:
Appeal against demand, interest, and penalty for 100% EOU units under Notification 1/95-CE - Contention of demands being time-barred under Section 11A of the Central Excise Act.

Analysis:
The judgment involves multiple appeals by different entities against demands, interest, and penalties for violating conditions of Notification 1/95-CE related to 100% EOU units. The primary issue revolves around the contention that the demands made are time-barred under Section 11A of the Central Excise Act.

Detailed Analysis:
The appellants, engaged in manufacturing polyester yarn and fabrics under the EOU scheme, were found to have procured raw materials without duty payment and cleared them to the DTA in violation of notification conditions. The demands, along with interest and penalties, were confirmed by the adjudicating authority. The sole argument presented by the appellants was that the demands were time-barred as show cause notices were issued after five years from the period in dispute, citing Section 11A provisions.

The Revenue's stance was based on thorough investigations revealing clandestine clearance of goods without duty payment. Evidence collected from transporters, recipients, and even the proprietors themselves indicated violations of notification conditions. The Revenue argued that the five-year limitation for issuing show cause notices in cases of suppression or fraud starts from the date of knowledge. The Revenue relied on Supreme Court decisions to support the timely issuance of show cause notices in light of the appellants' admission of violations.

The Tribunal found that the appellants did not contest the demands on merits but solely on the grounds of being time-barred. Detailed investigations revealed discrepancies in the records maintained by the appellants, indicating clandestine clearances to DTA. The Tribunal noted the appellants' failure to deny these violations and emphasized Supreme Court decisions interpreting Section 11A to compute limitation periods based on the date of knowledge.

Ultimately, the Tribunal dismissed the appeals, highlighting that the demands were not disputed on merits, and the evidence collected supported the timely issuance of show cause notices within the five-year period from the date of knowledge. The Tribunal found no merit in the appellants' argument that the demands were time-barred under Section 11A, leading to the dismissal of the appeals.