2021 (5) TMI 899 - AT - Central Excise

EOU - Clearance of goods in DTA - manufacture and export of Ceramic Colours/Pigments, falling under CETA 32071040 - It was alleged by the Department that the items cleared in DTA by the appellants were not similar to the goods exported and there was violation of the provisions of Para 6.8 of FTP - benefit of N/N. 23/2003-CE dated 31.03.2003 - Extended period of limitation - similarity of goods, exported by the appellant - HELD THAT - Various judgments have given wider meaning to the word Similar . It would mean similar, same class of or same kind of goods. In the instant case, the goods exported and the goods cleared are described as ceramic colours. In view of the ratio of the various judgements cited, there is not even an iota of doubt that the goods cleared by the appellant in DTA are nothing but the goods which are similar to the goods exported well within the meaning assigned to the same in paragraph 6.8 of FTP. It has been demonstrated that the manufacturing activity is same for both type of colours. The similarity of the goods is established beyond reasonable doubt by the test report got conducted on the impugned goods for the subsequent period and relied upon, as is evident from the Order-in-Original, dated 31.12.2012 (adjudicating the SCN issued for the period Feb 2011 to Jan 2012). The facts of the case here are in a narrower compass compared to the cases discussed as above, the difference in goods only being that of concentrated or diluted. Both of them are named ceramic colours only. Test reports indicated that they have similar composition as rightly held by the Learned Commissioner for the subsequent period. Therefore, there is no doubt that the goods exported and the goods cleared by the appellants are similar in terms of Para 6.8 of FTP. Moreover, the fact that Development Commissioner has issued permission is not denied - In view of the judgement in COMMISSIONER OF C. EX., HYDERABAD VERSUS NOVAPAN INDUSTRIES LTD. 2007 (1) TMI 5 - SUPREME COURT , the Order-In-Original should hold good for the earlier period also. It is pertinent to note that the department did not bring forth any change in the circumstances or the quality of the goods exported and cleared in DTA by the appellant. The department has wrongly tried to differentiate between the goods on the basis of physical characteristics or the price of the same. Thus, the department has wrongly tried to differentiate between the goods on the basis of physical characteristics or the price of the same. Time Limitation - HELD THAT - The permission given by the Development Commissioner would certainly indicate the products which are to be exported and cleared in DTA. When the description is ceramic colours, in both export as well as DTA clearance documents, the department was within their rights to call for clarification from the Development Commissioner or the appellants so as to satisfy themselves. This having not been done, it is not open for the department to invoke extended period, alleging that the appellants have suppressed some information, after considerable lapse of time. No suppression, leave alone intent evade duty has been established - the goods cleared in DTA by the appellants in DTA are similar to those exported and that there are no violations provisions of either paragraph 6.8 of FTP or Central Excise notification 23/2003, the appeal survives on merits - the issue of limitation will be inconsequential. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the ceramic colours cleared by the appellants for export as well as DTA are similar.
2. Whether the benefit of Notification No. 23/2003-CE can be extended to the impugned goods.
3. Whether the extended period can be invoked in the instant case.

Issue-Wise Detailed Analysis:

1. Similarity of Goods:
The primary issue is whether the ceramic colours cleared for export and Domestic Tariff Area (DTA) are similar. The appellants argued that the goods are similar, with the only difference being the concentration levels, which affects the price. They cited various legal precedents to support their claim that "similar goods" do not need to be identical but should belong to the same class or category. The department, however, contended that the goods are dissimilar in properties and characteristics, thus violating Para 6.8 of the FTP and making the exemption under Notification No. 23/2003-CE inapplicable.

The Tribunal reviewed various judgments, including those from the Supreme Court and other Tribunals, which provided a broader interpretation of the term "similar goods." The Tribunal concluded that the goods exported and those cleared in DTA are indeed similar, as they are both described as ceramic colours and have similar compositions. The Tribunal also noted that the Development Commissioner had permitted the manufacture and export of these goods, further supporting the appellants' case.

2. Benefit of Notification No. 23/2003-CE:
The appellants claimed that since the goods are similar, they should be eligible for the exemption under Notification No. 23/2003-CE. The Tribunal agreed, stating that the similarity of the goods was established beyond reasonable doubt by test reports and the permission from the Development Commissioner. The Tribunal held that the department's attempt to differentiate the goods based on physical characteristics or price was incorrect. Therefore, the benefit of the notification should be extended to the impugned goods.

3. Invocation of Extended Period:
The appellants argued that they had obtained the necessary permissions and regularly submitted ER-2 returns, thus the extended period should not be invoked. The department countered that the appellants had not disclosed the correct details of the goods cleared in DTA. The Tribunal found this argument untenable, noting that the Development Commissioner's permission would have indicated the products to be exported and cleared in DTA. The Tribunal held that the department should have sought clarification earlier and that no suppression or intent to evade duty was established. Consequently, the extended period could not be invoked.

Conclusion:
The Tribunal concluded that the goods cleared in DTA are similar to those exported, making them eligible for the exemption under Notification No. 23/2003-CE. The Tribunal also ruled that the extended period could not be invoked due to the lack of suppression or intent to evade duty. The appeal was allowed with consequential relief as per law.