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2022 (7) TMI 1061 - AT - Central ExciseEOU - achievement of NFE - Demand of Central Excise Duty alongwith Interest and Penalty - Goods cleared directly and also through merchant exporters - it is alleged that in respect of the exports made through Merchant Exporters certain discrepancies such as on some of the shipping bills in respect of these exported goods, the status of the appellant EOU was not shown, in others, the name of the noticee and its status as an EOU was not mentioned - export of goods or not - third party clearances of goods without payment of central excise duty under invoices in DTA - Board's Circular number 03/ 91-Cus dated 24.01.1991 - HELD THAT - The goods cleared by the appellant and exported through third party have been considered as clearance made in DTA, for making the demand of the duty for the reason that the documents filed for the export of goods did not indicated the name or the status of the Appellant. In view of the adjudicating authority, for this reason the goods which were cleared for exports did not fulfilled the requirement of the Board's Circular number 03/ 91-Cus dated 24.01.1991, and hence were clearance made in DTA - Commissioner admits on the basis of the documents submitted by the appellant that these goods were duly exported. Even the annexure to the show cause notices clearly show that all the goods were cleared against the ARE-1 and hence were cleared for exports only. Annexure to each of the show cause notice is an admission of the fact that goods were cleared for export from the premises of appellant. Also neither the show cause notice nor the impugned order state that the proof of export was not submitted by the appellant/ merchant exporter/ third party exporter, in any of the cases. When the goods were cleared for exports and proof of export submitted in each and every case, the demand made treating these goods to be cleared in DTA, is contrary to the provisions of the Rule 18 of the Central Excise Rules, 2002. In case of any unit whether an EOU or any DTA unit exporting the goods, the proof of export once submitted establishes the factum of export. Impugned order could not have proceeded to demand the Central Excise Duty contrary to the provisions of the Rule 18. It could have been the case of the revenue that in view of the Circular of 1991 and of 2006, the benefit of export for the purpose of determining NFE, for the purpose of evaluating the performance of the unit should have been denied. However the performance of the EOU s is monitored by the Development Commissioner to whom the return showing the export turnover is furnished by the unit in the manner as prescribed. There is not even a whisper in the show cause notice or in the impugned order, that Development Commissioner has while evaluating the export performance of the unit, has denied the benefit of export in respect of these consignments cleared by the appellant in terms of para 6.10 of the Import Export Policy, 2009-14 read with para 6.18 of the Handbook of Procedures, 2009-14. Thus, if the benefit is provided in terms of the statutory provision, the same can be circumscribed/ denied by taking resort to a circular. Thus, there are no merits in the demand made - appeal allowed.
Issues Involved:
1. Determination and confirmation of central excise duty demands. 2. Imposition of interest on the confirmed demands. 3. Imposition of penalty under Section 11AC(1)(a) of the Central Excise Act, 1944, and Rule 25(1)(d) of the Central Excise Rules, 2002. 4. Validity of treating goods exported through third parties as DTA clearances. 5. Compliance with procedural requirements for export documentation. Issue-wise Detailed Analysis: 1. Determination and Confirmation of Central Excise Duty Demands: The Commissioner confirmed demands totaling Rs. 3,72,87,926/- under Section 11A(10) of the Central Excise Act, 1944, against the appellant, an Export Oriented Unit (EOU), for goods exported through merchant exporters. The basis for this demand was discrepancies in shipping bills, where the appellant's EOU status or name was not mentioned, leading to the treatment of these goods as DTA (Domestic Tariff Area) clearances. The show cause notices alleged that the appellant made third-party clearances without paying central excise duty, contrary to Para 6.19 of the Handbook of Procedures (Vol. II) of the Export Import Policy. 2. Imposition of Interest: The Commissioner directed the appellant to pay interest on the confirmed amounts under Section 11AA of the Central Excise Act, 1944. This was in line with the demands of unpaid central excise duties for the period from 01.04.2007 to 31.12.2013, as per the show cause notices. 3. Imposition of Penalty: A penalty equal to the confirmed demand amount (Rs. 3,72,87,926/-) was imposed on the appellant under Section 11AC(1)(a) of the Central Excise Act, 1944, and Rule 25(1)(d) of the Central Excise Rules, 2002. The penalty was based on the view that the appellant deliberately declared DTA clearances as exports through third parties, thereby committing a default. 4. Validity of Treating Goods Exported Through Third Parties as DTA Clearances: The Tribunal noted that the goods were cleared for export against proper ARE-1 forms, and the fact of export was not disputed. The Commissioner's order relied on a Board Circular from 1991, which required the name and status of the EOU to be mentioned in export documents. However, the Tribunal found that the goods were indeed exported, and proof of export was submitted in each case. The demand treating these goods as DTA clearances was deemed contrary to Rule 18 of the Central Excise Rules, 2002, which establishes the fact of export once proof is submitted. 5. Compliance with Procedural Requirements for Export Documentation: The Tribunal highlighted that the procedural lapses, such as non-mention of the appellant's name or status in shipping bills, were technical in nature. The Board's Circulars and DGFT Policy Circulars emphasized that the name and status of the EOU must be indicated in shipping bills, but the Tribunal held that these procedural lapses did not negate the fact of export. The Tribunal referenced several cases, including Sarita Software Industries Ltd. and K G Denim Ltd., to support the view that statutory benefits cannot be denied based on circulars if the statutory provisions are met. Conclusion: The Tribunal concluded that the demands made were not justified, as the goods were exported, and proof of export was provided. The procedural lapses did not warrant treating the exports as DTA clearances. Consequently, the Tribunal allowed the appeal, setting aside the demands, interest, and penalties imposed by the Commissioner. The decision emphasized that statutory provisions take precedence over procedural lapses outlined in circulars.
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