2017 (4) TMI 594 - AT - Central Excise

Terminal Excise Duty (TED)- Clearance of the vehicles under FTP without payment of duty - Department case is that the appellant ought to have first discharged the TED and should have claimed the refund - extended period of limitation - Held that - Since the appellant had categorically informed the department regarding supply of goods under EPCG licence and filed the re-warehousing certificate, the allegation of suppression, fraud, etc. cannot be leveled against the appellant justifying the issuance of show cause notice by invoking the extended period of limitation - demand confined to normal period - since there is no suppression with intent to evade payment of duty, the penalty cannot be imposed on the appellant - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
1. Demand for central excise duty on clearance of vehicles under Foreign Trade Policy without payment.
2. Validity of show cause notice issued by invoking extended period of limitation.
3. Imposition of penalty in absence of mens rea.

Analysis:
1. The appellant, engaged in manufacturing vehicles falling under specific tariff sub-headings, cleared vehicles to an EPCG license holder under FTP during 2008-2011 without payment of duty initially. The Department objected, requiring Terminal Excise Duty (TED) payment and refund claim. Upon realizing the error, the appellant paid the duty with interest. Subsequently, a show cause notice was issued for duty recovery and penalty imposition, leading to an adjudication order confirming the duty demand and penalty. The appellant challenged this order before the Tribunal.

2. The appellant argued against the extended period of limitation invoked for issuing the show cause notice, contending no element of fraud or intent to evade duty existed, warranting a notice within the normal one-year period. Citing case laws and certificates, the appellant emphasized the absence of mens rea for penalty imposition even within the normal demand period. In response, the Revenue representative reiterated the impugned order's findings.

3. Upon review, the Tribunal observed that the disputed goods were cleared under ARE-3 procedures to an EPCG license holder, with all relevant documentation provided to the Department. Noting the appellant's proactive communication and submission of necessary certificates, the Tribunal concluded that no suppression or fraud existed to justify invoking the extended limitation period for the show cause notice. The Tribunal distinguished cited cases dealing with normal notice periods and emphasized the Department's awareness of the non-duty paid clearance. Consequently, the Tribunal decided to confine the demand to the normal period and waived the penalty due to the absence of intent to evade duty payment.

In conclusion, the Tribunal disposed of the appeal, ruling in favor of the appellant based on the lack of suppression with intent to evade duty payment, leading to the exclusion of penalty imposition in the given circumstances.