2014 (12) TMI 1130 - AT - Central Excise

Demand of CVD and SAD on the goods cleared by 100% EOU - Clearance of goods to own DTA Unit under stock transfer - Held that - in show cause notice and the impugned order no allegation or reasoning of any nature in raising such a demand was indicated and the demand was confirmed merely by relying upon demand chart which is an annexure to the SCN. As we find no allegations for demand has been stated either in the show cause notice nor there are any reasoning in the impugned orders for confirmation of such demand, we are of the considered view that such demand cannot be confirmed as it is not in accordance with law. - as there is no dispute that clearances were made by M/s STI to their own DTA Unit and the credit of SAD and CVD was available to the DTA Unit, hence the entire issue is revenue neutral. In such case it cannot be said that there has been intentional evasion of payment of duty by the appellant-assessee. We find that the goods were cleared on invoices indicating all the particulars and we do not find any deliberate act on the part of the assessee to evade payment of duty. We are of the view that the demands raised by invoking extended period of limitation on this count are not invokable. For the foregoing reasons also we hold that the demand of SAD and CVD is unsustainable. However in respect of demand of CVD, based upon our above findings we hold that only the demand falling under normal period of limitation is sustainable, we hold it so. Since the most of the demand is set aside, having held that there was no intention to evade duty, we find that penalties imposed are unwarranted and they are set aside. Demands of CVD raised by invoking extended period of limitation are not sustainable and only the demand of CVD under normal period would survive. We also set aside the penalty imposed under Section 11AC. - Decided partly in favour of assesse.

Summary

Issues involved:
Appeal against demand of Special Additional Duty (SAD) and Central Value Duty (CVD) on goods cleared to own DTA unit, validity of demand based on computation without proper reasoning, applicability of extended period of limitation, plea of revenue neutrality, imposition of penalties under Section 11AC.

Analysis:

1. Demand of SAD on goods cleared to own DTA unit:
The case involved an appeal against the demand of SAD on goods cleared by a 100% Export Oriented Unit (EOU) to its own Domestic Tariff Area (DTA) unit. The appellant argued that similar issues had been decided in favor of the assessee in various judgments. The Tribunal referred to previous decisions and ruled in favor of the assessee, holding that the demand of SAD on goods cleared to its own DTA unit was not sustainable. The appeal of the revenue was dismissed on this issue.

2. Demand of CVD and applicability of extended period of limitation:
Regarding the demand of CVD, the Tribunal noted that the demand was confirmed based solely on a computation without proper reasoning provided in the show cause notice or the order. The appellant argued that the demands were not supported by any valid grounds and that the quantification was incorrect. The Tribunal agreed with the appellant, stating that the demand lacked a proper basis and reasoning, making it unsustainable. Additionally, the Tribunal considered the plea of revenue neutrality, noting that the goods were cleared to a sister concern with credit available, making the issue revenue neutral. As there was no deliberate evasion of duty and no malafide intention, the demands raised by invoking the extended period of limitation were deemed unsustainable. The Tribunal held that only the demand falling under the normal period of limitation was sustainable. Penalties imposed were also set aside due to the lack of intention to evade duty.

3. Conclusion:
The Tribunal dismissed the appeal filed by the revenue and allowed the appeal filed by the appellant to the extent that the demands of CVD raised by invoking the extended period of limitation were not sustainable. The demand of CVD under the normal period was upheld. The penalties imposed under Section 11AC were set aside. Both appeals were disposed of accordingly, and cross objections filed by the assessee were also disposed of.

This comprehensive analysis covers the issues involved in the legal judgment, providing a detailed overview of the Tribunal's decision on each aspect of the case.