2016 (1) TMI 436 - AT - Central Excise

100% EOU - Misuse of the scheme - failure to fulfill the export obligations - appellant contended that the only ground on which the demand against the appellant have been confirmed is that of cancellation of LOP and their status as 100% EOU by the Development Commissioner - There has been no discussion of exports made by the appellant and proper quantification of duty on such raw materials which were actually put into the intended use in a EOU. - Held that - It is seen that the Original Authority did not examine and give his finding that how the present demand of duty is over and above the already confirmed demands and whether there is overlapping of the quantification. It is apparent that there is overlapping demands as seen from the reason given by the Assistant Commissioner in his letter dated 22/05/2007. The earlier 4 show cause notices having been issued on different grounds is no reason for confirming the demanded amount again in the present proceedings. Even if they are on different grounds no discussion on such distinction has been made. As accepted by the learned AR the demands ave clearly overlapping. It is also clear that all the demands are linked to violation of the conditions of the notifications which granted excise/customs duty exemptions for the inputs used by the appellant as they are 100% EOU and certain export performance of appellants. Further, we also find that there is no discussion or finding on the appellants claim regarding substantial exports carried out by them during the impugned period. Considering the above position, we find it will be legal and proper to set aside the impugned order and to remand the matter to the Original Authority to examine and give his clear findings on the above issues. - Matter remanded back.

Summary

Issues:
1. Confirmation of demand for Customs and Central Excise duty against the appellants.
2. Imposition of penalties on the main appellant and the Director.
3. Confiscation and imposition of redemption fine on goods.
4. Allegation of passing the impugned order without proper application of mind.
5. Lack of consideration of export performance and confirmation of demands in earlier show cause notices.
6. Overlapping demands and absence of clear quantification.

Analysis:

Issue 1:
The Commissioner confirmed the demand for Customs duty and Central Excise duty against the main appellant and the Director, based on the irregular concessions availed by the main appellant. The demand was for a significant amount covering the period from 2000 to 2005.

Issue 2:
Penalties were imposed on the main appellant and the Director in substantial amounts, along with the confiscation of goods valued at a high sum. A redemption fine was also imposed due to the unavailability of the confiscated goods.

Issue 3:
The impugned order was challenged on the grounds of lack of discussion and findings regarding the quantification of the demand. The appellant argued that the order was passed summarily without proper consideration of the exports made and the duty on raw materials used in the EOU.

Issue 4:
The appellant contended that the impugned order lacked proper application of mind and required to be set aside. The Commissioner's findings indicated that the appellants did not present their case with evidence, leading to the acceptance of allegations made in the show cause notice.

Issue 5:
The appellant's consistent contravention of EOU scheme provisions and misuse of non-duty paid raw materials were highlighted. The lack of fulfillment of export obligations and failure to submit statutory returns were factors considered in confirming the duty demand and penalties.

Issue 6:
The Original Authority did not adequately address the overlapping demands and failed to give clear findings on the quantification of duty demand. The absence of discussion on the distinction between different grounds for demands in earlier show cause notices raised concerns about the lack of proper analysis.

In conclusion, the Tribunal found it necessary to set aside the impugned order and remand the matter to the Original Authority for a detailed examination. Clear quantification of duty demands, analysis of reasons, and consideration of export performance were deemed essential. The Tribunal directed the Original Authority to complete the adjudication within three months, considering the significant government revenue involved and the age of the case.