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2018 (6) TMI 379 - AT - Central Excise100% EOU - Misdeclaration of quantity and value of DTA Clearances - N/N. 8/97-CE dated 1.3.97, N/N. 6/97-CE dated 1.3.97 and N/N. 23/03-CE dated 31.3.32003 - issuance of second and third SCN on same issue - invocation of extended period of limitation - Held that - The allegation of under-valuation was investigated by the Revenue resulting in SCN dated 04.09.2006. On the basis of the known facts, Revenue was already in a position to re-compute the overall ceiling of DTA clearances by adding the quantum of under-valuation detected, but Revenue failed to do so. For such re-computing and raising the revised demand, a further SCN dated 01.12.2006 has been issued in which the allegation of suppression has been made once again - The decision of the Hon ble Supreme Court in the M/s Nizam Sugar Factory case 2006 (4) TMI 127 - SUPREME COURT OF INDIA will be applicable and Revenue will be precluded from raising the allegation of suppression in the SCN dated 01.12.2006 - the demand of duty raised in SCN dated 01.12.2006 is required to be restricted to that falling within the normal period of limitation. Demand of duty on the cotton waste which stands cleared by the appellant in the DTA - Held that - The decision in the case of M/s STI India covers the subsequent period and hence is applicable to the facts of the present case 2017 (4) TMI 328 - CESTAT NEW DELHI , where it was held that the value of cotton waste which stands exempted from duty is not required to be counted for DTA sales entitlement - there is no justification to include value of cotton waste in the DTA entitlement. The appeals filed by the appellants are partially allowed and the matter remanded to adjudicating authority for re-quantification of the demand within the normal period.
Issues:
1. Allegation of under-valuation of DTA clearances and subsequent show cause notices. 2. Review of eligibility for concessional rate of duty in respect of DTA clearances. 3. Imposition of penalties and duty demands by the Commissioner. 4. Validity of the second show cause notice issued for the same period of dispute. 5. Inclusion of cotton waste value in re-determining DTA entitlement. Issue 1: Allegation of under-valuation of DTA clearances and subsequent show cause notices: The appellant company, engaged in manufacturing yarn, faced allegations of under-valuation of DTA clearances. After a Settlement Commission order and payment of differential duty, a subsequent show cause notice was issued for recovery of additional duty. The appellant argued that the second notice was time-barred as all relevant facts were known to the authorities during the first notice. Issue 2: Review of eligibility for concessional rate of duty in respect of DTA clearances: The jurisdictional Central Excise Authorities reviewed the appellant's eligibility for concessional duty rates on DTA clearances. It was found that the clearances exceeded the ceiling of 50% of the FOB value of exports, making them ineligible for concessional rates. This led to the issuance of a show cause notice for duty recovery. Issue 3: Imposition of penalties and duty demands by the Commissioner: The Commissioner confirmed a duty demand, imposed penalties on the company's officials, and appropriated the amount paid in settlement. However, proceedings regarding the inclusion of cotton waste value for DTA entitlement were dropped by the adjudicating authority. Issue 4: Validity of the second show cause notice issued for the same period of dispute: The appellant contended that the second show cause notice for the same period as the settled dispute was invalid due to the Revenue's prior knowledge of the under-valuation. The Tribunal agreed, citing a Supreme Court decision, and restricted the demand to within the normal limitation period. Issue 5: Inclusion of cotton waste value in re-determining DTA entitlement: The Revenue appealed the dropping of the demand on cotton waste value for re-determining DTA entitlement. The Tribunal considered precedents and held that as per the Exim Policy, the value of exempted cotton waste should not be included in DTA sales entitlement, rejecting the Revenue's appeal. In conclusion, the Tribunal partially allowed the appeals filed by the appellants, rejected the Revenue's appeal, and remanded the matter to the adjudicating authority for re-quantification of the demand within the normal period.
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