2022 (7) TMI 977 - AT - Central Excise

100% EOU - CENVAT Credit - clearance of goods in domestic tariff area in excess of the value permitted by the Development Commissioner during various years of operation - extended period of limitation - Scope of appeal - HELD THAT - The Commissioner came to a conclusion that the issue on limitation was not raised by the appellant in their earlier appeal and therefore it was not examined by the Tribunal. M/s. Flex Foods Limited in this appeal has enclosed copy of the appeal earlier filed by them before Tribunal, which was numbered as E/51809/2015- EX DB . A perusal of the said appeal shows that the issue of invocation of the extended period and limitation was specifically challenged by the appellant in paragraph 7 of the said appeal memorandum. It is seen that arguments on limitation were also raised by the appellant. The Tribunal, however, did not take note of the said argument nor gave any findings, presumably because the matter was being remanded on merit itself. In this background it is found that the observation of the Commissioner in the impugned order that the issue on limitation was not raised by the appellant before Tribunal is incorrect. It is also noticed that the remand order of Tribunal dated 16.05.2017 had also kept all issues open, which implies that the issue of limitation was also open. The impugned order cannot be sustained and is, therefore, set aside - the matter is remanded to the Commissioner for fresh adjudication on merits as well as on limitation.

Summary

Issues involved:
Cross appeals filed by M/s. Flex Foods Limited and Commissioner of Custom Central Excise, Dehradun against the order of Commissioner regarding Central Excise Duty demand on goods cleared by M/s. Flex Foods Limited to the domestic tariff area and enhancement of penalty.

Detailed Analysis:

Issue 1: Central Excise Duty Demand
The fundamental charge against M/s. Flex Foods Limited is the clearance of goods in the domestic tariff area exceeding the value permitted by the Development Commissioner. The Tribunal examined whether the goods cleared were in accordance with the Letter of Permission (LOP) granted by the Development Commissioner. The dispute revolved around the interpretation of the permission for Duty to Area (DTA) sale granted under the Foreign Trade Policy. The Tribunal noted discrepancies in the evaluation of concessional duty benefits and emphasized the need for Customs authorities to monitor and enforce compliance with the permissions granted by the Development Commissioner. The Tribunal concluded that the impugned orders were not in conformity with the DTA permission and remanded the issue back to the Jurisdictional Commissioner for a fresh decision based on the permissions granted by the Development Commissioner.

Issue 2: Limitation
The Commissioner, during the remand proceedings, did not address the issue of limitation raised by the appellant. The Commissioner stated that the matter was remanded for the re-qualification of duty based on permissions granted by the Development Commissioner and deemed the issue of limitation irrelevant. However, M/s. Flex Foods Limited argued that the issue of limitation was raised in their earlier appeal before the Tribunal, challenging the invocation of the extended period. The Tribunal's remand order had kept all issues open, including limitation, implying that it was a valid issue for consideration. Consequently, the impugned order was set aside, and the matter was remanded to the Commissioner for fresh adjudication on both merits and limitation.

Conclusion:
The Tribunal's decision set aside the impugned order, remanding the matter back to the Commissioner for a fresh adjudication on both the central excise duty demand issue and the limitation issue. The appeal filed by M/s. Flex Foods Limited was allowed by way of remand, rendering the appeal by the revenue and cross objections by M/s. Flex Foods Limited infructuous. The detailed analysis of the issues involved provides a comprehensive understanding of the legal judgment delivered by the Appellate Tribunal CESTAT NEW DELHI.