2023 (7) TMI 426 - AT - Central Excise

100% EOU - inclusion of CIF value - contravention of conditions of Notification No.2/95 dt. 04.01.1995 read with EXIM Policy 1997-2002 in as much as they had furnished incorrect details to MEPZ and obtained approval for clearance of goods to DTA sales - value of goods procured indigenously need to be included in the assessable value or not - time limitation - HELD THAT - The Hon ble Supreme Court in the case of COSMIC DYE CHEMICAL VERSUS COLLECTOR OF CENTRAL EXCISE, BOMBAY 1994 (9) TMI 86 - SUPREME COURT held that the word suppression of facts is qualified by the word wilfull and therefore there should be intent to evade payment of duty. In the case of M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I 2007 (8) TMI 11 - SUPREME COURT , it was held that mere omission to give correct information is not suppression of facts unless it was deliberate to stop payment of duty. After appreciating the facts and applying the above Apex Court decisions, the demand is time barred. The demand raised invoking the extended period cannot sustain and requires to be set aside - Appeal is allowed on the ground of limitation.

Summary

Issues:
The issues involved in the judgment are the contravention of conditions under Notification No.2/95 dated 04.01.1995, incorrect details furnished to MEPZ for approval of DTA sales, and the invocation of the extended period of limitation for duty recovery.

Contravention of Conditions under Notification No.2/95:
The appellant, a 100% EOU engaged in manufacturing telephone cords, imported raw materials without payment of Customs duty and availed concessional rates under Notification No.2/95. The department alleged that the appellant furnished incorrect details to MEPZ to obtain approval for DTA sales, boosting the value addition achieved to 30.6%. The appellant argued that all details were submitted and certified by the Chartered Accountant, with no suppression of facts. The Tribunal found that the appellant did not willfully suppress facts, setting aside the demand raised under the extended period.

Incorrect Details to MEPZ for Approval of DTA Sales:
The appellant obtained permission to sell goods in DTA based on documents showing import materials, export sales, finished goods cost, and value addition. The department contended that the appellant wrongly deducted the value of imported raw materials, leading to a higher projection of foreign exchange earnings. The department argued that including the value of goods procured indigenously in the calculation would result in a lower net foreign exchange percentage. The Tribunal found that the appellant did not deliberately misstate facts to evade duty, citing Supreme Court precedents, and allowed the appeal on the ground of limitation.

Invocation of Extended Period of Limitation for Duty Recovery:
The department issued a show cause notice invoking the extended period, alleging suppression of facts by the appellant to evade duty payment. The appellant argued that all necessary details were provided and verified by authorities before obtaining permission for DTA sales. The Tribunal held that there was no willful suppression of facts by the appellant, referring to Supreme Court decisions, and set aside the demand raised under the extended period. The appeal was allowed on the ground of limitation, with consequential relief as per law.