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2019 (1) TMI 4 - AT - Central Excise100% EOU - Demand of Customs duty as well as Central Excise duty - procurement of inputs without payment of duty and has been used in export of goods without any permission from Development Commissioner to procure the said inputs - Held that - In this case the appellant was having the 100% EOU to manufacture of said products vide LOP dated 22.11.2004. All the products exported by the appellant have been allowed finally by Development Commissioner vide its order dated 21.03.2017. In the case of Dendyal Magasvargiya Sahakari Soot Frini Ltd. 2014 (8) TMI 746 - CESTAT MUMBAI this Tribunal that accrued vested right cannot be taken away merely because there is a delay in issuing the letter of permission by the Development Commissioner. In the present case, the amendment in letter of permission (LOP) has granted to the appellant with the delay, therefore, merely on procedural of lapse benefit of notifications cannot be denied to the appellant - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Demand of Customs and Central Excise duty for procuring inputs without payment of duty. 2. Requirement of permission from the Development Commissioner for procuring duty-free inputs. 3. Procedural lapses and their impact on the benefits of exemption notifications. 4. Validity of show cause notice issued during the pendency of proceedings before the Development Commissioner. 5. Bar of limitation on the demand issued against the appellant. 6. Misunderstanding of legal agreements as bonds. 7. Revenue loss due to the export of goods. Detailed Analysis: 1. Demand of Customs and Central Excise Duty: The appellant, a 100% Export Oriented Unit (EOU), faced a demand for Customs and Central Excise duty for procuring inputs without payment of duty, used in the export of goods without permission from the Development Commissioner. The appellant argued that there was no condition in Notification No. 22/2003-CE and Notification No. 52/2003-CUS requiring prior permission from the Development Commissioner for duty-free procurement of inputs. 2. Requirement of Permission from Development Commissioner: The appellant procured duty-free raw materials under CT-3 certificates and used them in manufacturing goods for export. The Development Commissioner added 74 new products to the Letter of Permission (LOP) on 08.08.2013, but not retrospectively. The appellant argued that the procedural delay in issuing the amended LOP should not negate their right to duty-free procurement, citing Tribunal decisions supporting their stance. 3. Procedural Lapses and Exemption Notifications: The Tribunal noted that the appellant followed the entire process of the Notifications during the gap period and that procedural delays in obtaining permissions should not deny the substantive benefits of the exemption notifications. The Tribunal referenced previous cases where similar procedural lapses were condoned, and the benefits of notifications were upheld. 4. Validity of Show Cause Notice: The show cause notice was issued on 21.07.2014, during the pendency of proceedings before the Development Commissioner. The appellant argued that this violated CBEC Circulars No. 21/95-CUS and No. 122/95-CUS, which stipulate that no show cause notice should be issued while the Development Commissioner's decision is pending. The Tribunal agreed, stating that the demand should only be confirmed after a definite conclusion by the Development Commissioner. 5. Bar of Limitation: The demand covered the period from 19.11.2007 to 07.08.2013, but the show cause notice was issued on 21.07.2014. The appellant contended that the demand was barred by limitation since all inputs were procured with CT-3 certificates and were known to the Revenue. The Tribunal found merit in this argument, referencing decisions that supported the appellant's stance on the limitation period. 6. Misunderstanding of Legal Agreements as Bonds: The appellant argued that the adjudicating authority misunderstood the legal agreements as bonds, which should be treated as creating contractual liability recoverable through civil courts. The Tribunal agreed, referencing a decision that supported the appellant's interpretation. 7. Revenue Loss: The appellant asserted that there was no revenue loss since the goods were exported. The Tribunal noted this point and found no merit in the impugned orders, setting them aside. Conclusion: The Tribunal concluded that the procedural lapses did not justify denying the benefits of the notifications to the appellant. The show cause notice issued during the pendency of the Development Commissioner's decision was invalid, and the demand was barred by limitation. The impugned orders were set aside, and the appeals were allowed with consequential relief.
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