2014 (7) TMI 1015 - AT - Central Excise

Waiver of pre deposit - 100% EOU - Determination of rate of duty - Goods cleared into DTA against advance DTA sole permission - Notification No. 23/2003-C.E. (Sl. No. 2) of the Table to the Notification prescribes a concessional rate of duty in respect of DTA clearances made by a 100% EOU, which is subject to certain conditions, as mentioned in this notification - Held that - Since, the exemption Notification No. 23/2003-C.E. in terms of its condition in provides concessional rate of duty only to the goods cleared into domestic tariff area in accordance with sub-para (a), (d), (e) or (g) of para 6.8 of the Foreign Trade Policy and since it does not cover the goods cleared into DTA against advance DTA sale permission given under sub-para (k) of para 6.8 of the Foreign Trade Policy, it is very clear that the goods sold Into DTA against advance DTA sales permission granted under para 6.8(k) are not covered by this notification. While in terms of the conditions of this notification, the product being sold into DTA must be similar to the product being exported, in this case prima facie the product clear into DTA - O-Ring and the products exported - Striker bumpers and nut seals are not similar. The fact that the advance DTA clearances in terms of para 6.8(k) of the Foreign Trade Policy are not covered by this exemption notification is also clear from the Condition (II)(b) of the notification, according to which the total value of the goods cleared into DTA under sub-para (a), (d), (e) and (g) of para 6.8 does not exceed 50% of the FOB value of exports made during the financial year. Prima facie appellant were not entitled for concessional rate of duty under Notification No. 23/2003-C.E. in respect of advance DTA clearances made by them during the period from October 2006 to October 2007 - product being cleared into DTA and products being exported were not similar was never disclosed by the appellant to the department. Beside this, the appellant could not be unaware of the fact that while concessional rate of duty under Notification No. 23/2003-C.E. which they had erroneously availed, is available only when the DTA clearance are made under sub-para (a), (d), (e), (g) of the para 6.8 of the Foreign Trade Policy and the advance DTA clearances made under para 6.8(k) are not covered in this notification, they still availed of this notification - Prima facie case not in favour of assessee - Conditional stay granted.

Issues Involved:
1. Applicability of concessional rate under Notification No. 23/2003-C.E. for DTA clearances.
2. Requirement of achieving positive net foreign exchange (NFE) for eligibility.
3. Similarity between goods cleared in DTA and exported goods.
4. Limitation and applicability of extended period for demand.
5. Imposition of penalty under Section 11AC of Central Excise Act.

Issue-wise Detailed Analysis:

1. Applicability of Concessional Rate under Notification No. 23/2003-C.E. for DTA Clearances:
The appellant, a 100% EOU, made DTA clearances under advance DTA sales permission. The Department contended that concessional rate under Notification No. 23/2003-C.E. is only applicable for clearances under sub-para (a), (d), (e), or (g) of para 6.8 of the Foreign Trade Policy. However, the appellant's clearances were under sub-para (k) of para 6.8, which pertains to advance DTA clearances and is not covered by the Notification. The Tribunal noted that the Notification explicitly restricts concessional rates to goods cleared under the specified sub-paras, thus excluding advance DTA clearances under sub-para (k).

2. Requirement of Achieving Positive Net Foreign Exchange (NFE) for Eligibility:
The Department argued that the appellant failed to achieve positive NFE during 2006-2007 and 2007-2008, a prerequisite under para 6.8(a) of the Foreign Trade Policy for concessional duty on DTA clearances. The Tribunal agreed, emphasizing that positive NFE is a mandatory condition for availing the concessional rate under the Notification.

3. Similarity Between Goods Cleared in DTA and Exported Goods:
The Notification requires that goods cleared into DTA must be similar to the goods exported. The appellant cleared O-rings into DTA while exporting striker bumpers and nut seals. The Tribunal found that these products were not similar, thus failing to meet the condition of the Notification.

4. Limitation and Applicability of Extended Period for Demand:
The appellant argued that the demand was time-barred as all facts were disclosed to the Department. However, the Tribunal noted that the appellant did not disclose the dissimilarity between the products cleared into DTA and those exported. Additionally, the Tribunal held that the appellant should have been aware that advance DTA clearances under para 6.8(k) were not covered by the Notification. Therefore, the extended period for demand was applicable, and the question of limitation required detailed scrutiny at the final hearing.

5. Imposition of Penalty under Section 11AC of Central Excise Act:
The Tribunal upheld the imposition of penalty under Section 11AC, citing the appellant's failure to disclose relevant facts and the erroneous availing of the concessional rate. The Tribunal directed the appellant to deposit the entire duty demand within six weeks, with the requirement of pre-deposit of interest and penalty waived until the disposal of the appeal.

Conclusion:
The Tribunal concluded that the appellant was not entitled to the concessional rate of duty under Notification No. 23/2003-C.E. for advance DTA clearances made under sub-para (k) of para 6.8 of the Foreign Trade Policy. The appellant failed to meet the conditions of the Notification, including achieving positive NFE and ensuring the similarity of goods cleared into DTA with those exported. The extended period for demand was applicable due to non-disclosure of relevant facts. The Tribunal directed the appellant to deposit the duty demand, with the pre-deposit of interest and penalty waived until the appeal's disposal.

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