2019 (6) TMI 1188 - AT - Central Excise

Benefit of N/N. 42/2001-CE(NT) - Duty free procurement of capital goods for erection of a Thermal Power Plant in Syria - exemption is allowed subject to fulfillment of condition that such duty free procured material would be exported by the assessee within a period of six months from the date of procurement of the goods or within such extended period as the appellant s jurisdictional Central Excise Authorities may allow - the ultimate request to extend the period stands rejected by the Assistant Commissioner and the benefit stands denied to them - HELD THAT - The ultimate request to extend the period stands rejected by the Assistant Commissioner vide his letter dated 23/02/2015 which has admittedly not been challenged by the appellant. As such the same has attained finality. Result and consequence of the same is as if there is no such extension order available on record as on date. If there is no extension having been granted by the Authorities, in terms of the provisions of Notification No.42/2001-CE(NT), condition of the said Notification stands violated - the confirmation of the demand is only as a consequence of the earlier proceedings of rejection of extension, which issue cannot be agitated before the Tribunal at this stage. Demand alongwith interest upheld - penalty is waived on the ground that export could not take place due to bona fide reasons -- appeal allowed in part.

Summary

Issues:
1. Extension of period for export of duty-free procured goods under Notification No. 42/2001-CE(NT).
2. Rejection of extension request leading to demand of duty, interest, and penalty.

Issue 1: Extension of period for export of duty-free procured goods under Notification No. 42/2001-CE(NT):
The appellant was granted a contract from the Government of Syria for a project, and they procured duty-free goods from Indian manufacturers under Notification No. 42/2001-CE(NT). The notification required the goods to be exported within six months of procurement or with an extended period as allowed by the jurisdictional Central Excise Authorities. Due to unrest in Syria, the project was stalled, and the appellant sought extensions for export, which were granted until a final rejection in February 2015. The Assistant Commissioner, citing Central Excise Manual provisions, rejected further extensions, leading to the initiation of proceedings and a demand notice for duty amounting to ?76,86,315.

Issue 2: Rejection of extension request leading to demand of duty, interest, and penalty:
The rejection of the extension request by the Assistant Commissioner resulted in the confirmation of the demand for duty, along with interest and a penalty of ?19,21,580 under Rule 25 of the Central Excise Rules, 2002. The appellant did not challenge the rejection before any higher Appellate Forum, leading to the finality of the rejection. The Tribunal upheld the confirmation of the demand, stating that without a granted extension, the conditions of the notification were violated. However, the penalty imposed was set aside considering the bona fide reasons for non-export due to circumstances beyond the appellant's control.

In conclusion, the appeal was disposed of by upholding the confirmation of the demand and interest, which had already been deposited by the appellant, while setting aside the penalty.