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2022 (4) TMI 988 - AT - Central Excise100% EOU - demand of differential duty - excess DTA clearance, over and above their DTA Sale Entitlement - inclusion of deemed exports made, in the FOB Value of exports for the purpose of DTA Sale Entitlement in terms of Circular dated 7.4.2000 - whether the quantification of DTA sale value in the SCN without adjusting the advance DTA sale allowed by the DC is correct or not? - HELD THAT - The department has refused to include the deemed exports for DTA sale entitlement on the basis of Board circular dt. 7.4.2000. Needless to say that Board circular is not binding the Tribunal. The issue whether the deemed exports made by the appellant has to be included for determination of DTA sale entitlement has been considered in various decisions. In COMMR. OF C. EX. CUS., SURAT-II VERSUS SABNAM SYNTHETICS LTD. 2010 (2) TMI 1136 - GUJARAT HIGH COURT , the Hon ble High Court had occasion to consider an identical issue, where reliance was placed in the case of Ginni International Ltd. v. Commissioner of Central Excise, Jaipur 2001 (9) TMI 165 - CEGAT, COURT NO. IV, NEW DELHI , where the Tribunal has held that when 100% EOU has submitted the permission to sell goods manufactured by them in DTA in accordance with para 9.9 of the Exim Policy, the Government cannot go beyond such permission and dispute the value of clearance allowed by the Competent Authority which in that case is Development Commissioner. Thus, it is clear that value of deemed export have also to be included for computing (FOB) value of exports. Following the same, the demand raised alleging that appellant has exceeded DTA sale entitlement is without any basis. The demand cannot sustain on merits. Extended period of limitation - HELD THAT - The entire details are available in the records. Further they have made several requests before the Development Commissioner showing their clearances and to include the deemed exports for computing DTA sale entitlement - first SCN for the period 1999-2000 issued invoking the extended period cannot sustain and has to be held as time-barred. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Quantification of DTA sale value without adjusting advance DTA sale allowed by the Development Commissioner. 2. Inclusion of 'deemed exports' in determining DTA sale entitlement. 3. Legality of the demand raised and penalties imposed. 4. Validity of invoking the extended period for issuing the show cause notice. Detailed Analysis: 1. Quantification of DTA Sale Value: The appellant argued that the quantification of DTA sale value in the show cause notices (SCNs) was erroneous as it did not consider the advance DTA sale permitted by the Development Commissioner (DC). The DC had allowed the appellant to sell goods in the Domestic Tariff Area (DTA) for a total value not exceeding ?65.83 lakhs, including the value of ?82,125/- already permitted as advance DTA sale on trial production. The Tribunal found that the quantification alleged in the SCN without considering the permitted DTA sale was indeed erroneous. 2. Inclusion of 'Deemed Exports': The appellant contended that the 'deemed exports' made to another 100% EOU should be included for determining the DTA sale entitlement. The department refused to include these deemed exports based on a Board circular dated 7.4.2000. However, the Tribunal noted that Board circulars are not binding on it and cited various decisions, including those of the Hon’ble Supreme Court, which affirmed that deemed exports should be treated as physical exports for the purpose of determining DTA sale entitlement. The Tribunal concluded that the demand raised on the basis that the appellant exceeded DTA sale entitlement without including deemed exports was without merit. 3. Legality of Demand and Penalties: The Tribunal found that the adjudicating authority had traversed beyond the SCN by determining the excess DTA sale in a manner not put forth in the SCNs. The decisions in cases like Ginni International Ltd., Amitex Silk Mills Pvt. Ltd., and others were cited, which held that once the Development Commissioner permits DTA sales, the revenue cannot disallow the clearance. The Tribunal held that the demand of duty and penalties imposed were not legally sustainable. 4. Validity of Extended Period for SCN: The first SCN was issued invoking the extended period. The appellant argued, relying on the decision in Meghmani Dyes & Intermediates Ltd., that when the details of total quantity of goods exported are available for verification from the accounts, it cannot be said that the appellant had indulged in fraud, collusion, willful misstatement, or suppression of facts with the intention to evade payment of duty. The Tribunal found force in this argument and held that the first SCN for the period 1999-2000, issued invoking the extended period, was time-barred. Conclusion: The Tribunal set aside the impugned orders, allowed the appeals with consequential relief as per law, and pronounced the judgment on 21.04.2022.
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