2024 (3) TMI 279 - AT - Central Excise

100% EOU - benefit under Notification No. 2/95 C.E. dated 04.01.1995 availed - failure to achieve a positive NFEP - invocation of extended period of limitation - HELD THAT - The Appellant is a 100% EOU engaged in the manufacture of excisable goods and has availed benefit under Notification No. 2/95 C.E. dated 04.01.1995 which provides exemption on 50% of the export goods allowed to be sold in DTA upon fulfillment of terms as provided under EXIM Policy. The entire demand for custom duty has been raised out of the Audit Objections by the Audit conduct by the CERA Officials in 2008 for the transactions pertaining to the time period October 2000 December 2000. It cannot be denied that the Department had sufficient time to conduct investigations pertaining to the issues raised before the lapse of ten years for that is for the time period for which the show cause notice has been issued. It is further noted that the lower authorities have only relied on B-17 Bond executed by the Appellants to invoke larger period of limitation thereby going beyond the scope of issues raised in the Show cause Notice that the Department was unable to provide cogent reason to invoke the same. The fact that the adjudicating authority has dropped the penalty as proposed in the Show Cause Notice shows that the demand is patently time barred and there in no evidence on record to establish suppression of facts or malafide intention to evade duty. Therefore the entire demand in this case is time barred as for the period of October 2000 December 2000 show cause notice was issued on 15.02.2010 which is not only beyond normal limitation but also that the Department has incorrectly invoked extended period of limitation without adducing evidence or cogent reason in support of their claim. The demand is barred by limitation - the impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the fulfillment of conditions for exemption of import duties, the alleged short levy of duty, the time limitation for raising demands, and the invocation of the extended period of limitation.

Fulfillment of conditions for exemption of import duties:
The Appellant, a 100% EOU engaged in manufacturing excisable goods, imported mixed scrap, used motors, and secondary core wiring of transformers claiming exemption of import duties. Metal scrap retrieved from these imports was sold in DTA after payment of central excise duties as per Notification 2/95 - C.E. The Department alleged a short levy of Rs. 4,45,717/- due to the Appellant not fulfilling the condition of positive NFEP and no physical export during the initial 3 years. The Commissioner (Appeals) upheld the demand along with interest, leading to the present appeal.

Time limitation for raising demands:
The Appellant argued that the demand is time-barred as the Show Cause Notice was issued ten years after the alleged contravention, beyond the five-year limitation period specified for demand of duty. The Appellant contended that the lower authorities confirmed the demand based only on the B-17 Bond executed by the Appellant, without satisfying the requirements for invoking an extended period of limitation. The adjudicating authority refrained from imposing penalties due to being barred by limitation, and the Commissioner (Appeals) upheld the demand beyond the normal and extended limitation period without proper justification.

Invoking the extended period of limitation:
The Tribunal observed that the entire demand for customs duty arose from Audit Objections conducted in 2008 for transactions from October 2000 to December 2000. The Tribunal noted that the Department had ample time to investigate before issuing the Show Cause Notice after ten years. The lower authorities relied solely on the B-17 Bond to invoke the extended period of limitation, without providing sufficient reasons. As the penalty proposed in the Show Cause Notice was dropped by the adjudicating authority, indicating a time-barred demand, the Tribunal found no evidence of suppression of facts or intent to evade duty. Consequently, the Tribunal held the demand as time-barred and set aside the impugned order, allowing the appeal.