2014 (5) TMI 905 - AT - Central Excise

Duty demand - Invocation of extended period of limitation - Penalty - Held that - Prima facie, invocation of the extended period of limitation for confirming demand of excise duty, interest and penalty, where the entire material facts were within the domain and knowledge of the competent authorities service November 2006 to November 2007, is unjustifiable. We therefore find a strong prima facie case in favour of the appellant. Accordingly, we grant waiver of pre-deposit in full and stay all further proceedings for realization of the adjudicated liability, pending disposal of the appeal - Stay granted.

Summary

Issues:
1. Conversion of 100% EOU to EPCG Scheme and de-bonding process.
2. Allegation of remitting duty at the wrong rate on indigenously procured capital goods.
3. Invocation of extended period of limitation for confirming demand of excise duty, interest, and penalty.

Analysis:

Issue 1: Conversion of 100% EOU to EPCG Scheme and de-bonding process
The appellant applied for conversion of 100% EOU to EPCG Scheme and de-bonding, following which various communications were exchanged between the appellant, Assistant Development Commissioner, Customs & Central Excise authorities, and Development Commissioner, NSEZ. The appellant submitted a list of depreciated value of imported and indigenous capital goods, deposited the required duty, and submitted necessary documents for final de-bonding. The Development Commissioner eventually granted final de-bonding and allowed conversion to EPCG Scheme on payment of excise duty on capital goods under the prevailing EPCG Scheme.

Issue 2: Allegation of remitting duty at the wrong rate on indigenously procured capital goods
A show cause notice was issued years later, alleging that the appellant should have remitted duty at a higher rate on indigenously procured capital goods. The impugned adjudication order confirmed the excise duty demand at a higher rate, along with interest and penalty. The appellant contested this, arguing that the invocation of the extended period of limitation for confirming the demand was unjustifiable, as the material facts were within the knowledge of competent authorities earlier. The Tribunal found a strong prima facie case in favor of the appellant and granted waiver of pre-deposit, staying further proceedings pending the appeal's disposal.

Issue 3: Invocation of extended period of limitation
The Tribunal considered the invocation of the extended period of limitation for confirming the demand of excise duty, interest, and penalty. It deemed the invocation unjustifiable, as the material facts were within the knowledge of competent authorities earlier. Consequently, the Tribunal found a strong prima facie case in favor of the appellant, granting waiver of pre-deposit in full and staying all further proceedings for realization of the adjudicated liability pending the appeal's disposal. The stay application was disposed of accordingly.