2015 (2) TMI 603 - AT - Central Excise

Benefit of exemption no. 13/98-CE - DTA Clearances - 100% EOU engaged in manufacture of spun silk yarn - Invocation of extended period of limitation - whether longer limitation period under proviso to section 11A(1) is applicable or the demand can be confirmed only for the normal limitation period - Held that - Once it is accepted that the respondent under their letter dated 24.03.1999 had intimated the Department that they would be making DTA clearances on payment of applicable duty, which in their case is nil, and when the invoices under which the DTA clearances were made at nil rate of duty also bear the signatures of the Central Excise Officers, the Department cannot be allege that the appellant had concealed the fact of making the DTA clearances at nil rate of duty, and in this regard, in our view, non filing of ER-2 return would not make any difference, as the departmental officers otherwise knew that the respondent were making DTA clearances at nil rate of duty. It is not the allegation of the Department that the jurisdictional Central Excise Officers were in collusion with the Respondent company and had collaborated with the Respondent in evasion of duty. There is no infirmity in the Commissioner's order holding that the longer limitation period is not applicable. Once this finding is upheld, there would be no question of demanding interest under section 11AB, as during the period of dispute, interest under Section 11AB on the duty non levied, short levied, short paid or erroneous refunded was linked with the fact as to whether non-levy, short levy, short payment or erroneously refunded of the duty was in account of any fraud, wilful misstatement, suppression of facts etc., on the part of the assessee. When these elements are not there, the interest under section 11AB cannot be charged. Since, the elements for imposing longer limitation period are not present, in our view, there would be no justification for imposition of penalty on the General Manager and Directors of the appellant company under Rule 209-A as, for this purpose, there has to be evidence on record to show that these persons dealt with certain excisable goods in the manner specified in this rule while knowing that the goods are liable for the confiscation, while in this case there is no such evidence. As regards permitting the cum duty benefit, in our view, the same was in accordance with the Apex Court judgment in the cases of CCE vs Maruti Udyog Ltd. reported in 2002 (2) TMI 101 - Supreme Court as this is not a case where there was deliberate short payment of duty. - No merit in appeal - Decided against Revenue.

Summary

Issues:
1. Duty liability of a 100% EOU for DTA clearances under notification no. 13/98-CE.
2. Application of longer limitation period under proviso to Section 11(A)(1) for recovery of duty.
3. Imposition of penalty on Directors and General Manager under Rule 209A of the Central Excise Rules, 1944.
4. Treatment of price realized from DTA sales for determining assessable value.

Analysis:
1. The case involved a dispute regarding the duty liability of a 100% Export Oriented Unit (EOU) for Domestic Tariff Area (DTA) clearances under notification no. 13/98-CE. The respondent, engaged in manufacturing spun silk yarn, claimed exemption from duty based on the notification. However, the Department contended that duty was payable for DTA clearances as per the proviso to Section 3(1) of the Central Excise Act, 1944. The issue revolved around the interpretation of the conditions specified in the notification and the fulfillment of Net Foreign Exchange Earning (NFEP) requirements.

2. The application of the longer limitation period under proviso to Section 11(A)(1) for the recovery of duty was a crucial aspect of the case. The Department argued for the confirmation of the full duty demand invoking the longer limitation period, alleging suppression of facts and duty evasion by the respondent. However, the Commissioner's order limited the duty demand to within the normal limitation period, citing factors such as the department's knowledge of DTA clearances and the absence of fraudulent intent on the part of the respondent.

3. The imposition of penalty on the Directors and General Manager under Rule 209A of the Central Excise Rules, 1944, was another contested issue. The Department sought penalties based on alleged suppression of facts and duty evasion. However, the Tribunal found that there was no evidence to support the imposition of penalties, as there was no indication of collusion or deliberate evasion by the individuals concerned.

4. A dispute arose regarding the treatment of the price realized from DTA sales for determining the assessable value. The Department challenged the Commissioner's decision to treat the price as inclusive of duty and allow abatement for determining the assessable value. The Tribunal upheld the Commissioner's decision, citing relevant judgments and emphasizing that there was no deliberate short payment of duty in this case.

In conclusion, the Tribunal dismissed the appeals, upholding the Commissioner's findings on duty liability, limitation period, penalty imposition, and assessable value determination. The judgment highlighted the importance of factual considerations, departmental knowledge, and absence of fraudulent intent in determining duty liabilities and penalties in excise cases.