2014 (2) TMI 1051 - AT - Central Excise

100% EOU - Clearance of goods upto 50% of FOB value of the exports into Domestic Tariff Area (DTA) by availing concessional rate of duty under Notification No.23/2003-CE dated 31.3.2003 as amended - use of duty-free imported raw materials / inputs like rough granite blocks, multi-colour granites, abrasives, tin oxide powder for the manufacture of finished goods cleared in DTA - Held that - the Commissioner observed the allegation of non-fulfillment of the condition of exemption under Sl. No.3A of the said Notification has not been contested by the applicant - applicant failed to make out a prima facie case for waiver of predeposit of entire amount of duty along with interest - Conditional stay granted.

Issues: Alleged violation of Notification No.23/2003-CE regarding duty-free imported materials used in finished goods cleared in DTA, enforcement of B-17 bond, limitation on demand of duty, suppression of facts, predeposit of duty amount.

Violation of Notification No.23/2003-CE:
The judgment revolves around the alleged contravention of Sl. No.3A of Notification No.23/2003-CE by the applicant, an EOU engaged in manufacturing and exporting granite products. The applicant was accused of using duty-free imported raw materials like rough granite blocks, multi-colour granites, abrasives, tin oxide powder, etc., in the finished goods cleared in the Domestic Tariff Area (DTA). The Commissioner noted that the applicant did not contest the non-fulfillment of the exemption condition under Sl. No.3A. The argument regarding the utilization of duty-free imported goods was supported by the Department, claiming it was evident from the records. The judgment highlights the importance of complying with the conditions specified in notifications to avail duty exemptions and the need for proper documentation to substantiate claims.

Enforcement of B-17 Bond:
The applicant contended that the B-17 bond should not be enforced as they had achieved positive Net Foreign Exchange (NFE). However, the judgment did not find this argument compelling enough to waive the predeposit of the duty amount. The enforcement of the B-17 bond was linked to the alleged violation of using duty-free imported materials in the finished goods cleared in DTA. The judgment emphasized the significance of bonds in ensuring compliance with trade regulations and the repercussions of breaching the terms of such bonds.

Limitation on Demand of Duty and Suppression of Facts:
The applicant raised the issue of limitation, arguing that there was no suppression of facts as they had filed returns. On the other hand, the Department contended that the extended period for demand was applicable due to the alleged suppression of the use of duty-free materials. The judgment acknowledged that the limitation and quantification of the duty demand would be examined in detail during the appeal hearing. It underscored the importance of timely and accurate disclosure of information to avoid disputes regarding the period for which demands can be raised.

Predeposit of Duty Amount:
In response to the arguments presented by both sides, the judgment directed the applicant to predeposit a specific amount within a stipulated period and stay the recovery of the balance dues during the appeal process. The decision to require a predeposit highlighted the procedural aspects involved in challenging duty demands and the need to comply with interim orders to continue the appeal process smoothly.

In conclusion, the judgment addresses multiple facets of the alleged violation of duty exemptions, enforcement of bonds, limitation on duty demands, suppression of facts, and predeposit requirements, emphasizing the importance of adherence to regulatory conditions and procedural norms in trade-related matters.

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