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2003 (9) TMI 200 - AT - Central ExcisePenalty and Confiscation - 100% Export Oriented Undertaking - Unauthorisedly and clandestinely removed the products - duty free imports and duty free supply of indigenous goods for use - Violation of the conditions in Notification no. 123/81, 57/94 and 1/95 - Indigenous goods without payment - HELD THAT - It is a well settled principle of law that when a substantive condition of a notification is not satisfied, the benefit accruing from the said notification is not available. Further, the user industry should follow the procedure contained in Chapter X of the Central Excise Rules, 1944. As per rule 196 (Chapter X) of the Central Excise Rules, if any excisable goods obtained under Rule 192 are not duly accounted for as having been used for the purpose and in the manner stated in the application, the applicant shall on demand by the proper officer, immediately pay the duty leviable on such goods. Since M/s. ALSA failed to observe the conditions of the above said notifications and since the Department Commissioner VEPZ rejected their request to permit them to fulfil the export obligation part which was accounted against Advance Licence Scheme along with the export obligation for remaining period of five years, M/s. ALSA are liable to pay duty on the above said goods received duty free, as provided in Rule 196 of the Central Excise Rules, 1944. Though M/s, ALSA agreed to pay the duty amount involved in respect of the above goods, they have not come forward to pay up the amount. The total Central Excise Duty amount payable on the above said goods works out to Rs. 2,77,430/-. Since M/s. ALSA failed to account for the above said goods as having used for the purpose for which they were received duty free and availed of the exemption without satisfying the conditions attached to the notifications, the said goods are liable for confiscation under Rule 173Q(1)(b) of the Central Excise Rules, 1944. M/s. ALSA are also liable for penalty under Rule 173Q(1)(b) of the said rules. Thus, it is clear that M/s. ALSA had cleared the goods manufactured in their 100% EOU to the DTA without payment of duty and without raising any invoice and without following the stipulated procedure for such clearance. They have also suppressed the fact of clearance of the said goods in the DTA without payment of duty from the knowledge of the department. Chapter VA of the Central Excise Rules, 1944 prescribes the procedure for removal of excisable goods for home consumption from an FTZ or from a hundred per cent export oriented undertaking. The goods manufactured and removed from the EOU have been admittedly and unquestionably Exported out of India. Therefore, there cannot be any duty leviable under the Customs Act and or Excise Act as arrived at by the ld. Commissioner. The goods brought to the EOU premises after availing benefit of exemption notifications under the Central Excise Act, 1944 and the Customs Act, 1962 have been admittedly used in the manufacture of goods within the EOU. The denial of the benefit of exemption is not called for. Exports in this case, from the EOU, as effected, cannot be held to be not exports in this case since export has not been defined under the Central Excise Act, 1944 or Central Excise Rules, 1944 thereunder; the meaning ascribed to the word 'export' as defined under the Customs Act and commonly understood, would have to apply. Since goods in this case have been undoubtedly, eventually, taken 'to a place outside India' after their removal from the EOU, their short sojourn and stay at Chennai, if at all, cannot be understood or interpreted to be a sale to DTA, as is being arrived at by the ld. Commissioner. They have been exported. If some unentitled benefit like DEEC as alleged has been claimed/granted the EOU cannot be found fault with. Since goods have been exported out of India, there cannot be any infringement of the EOU Rules except, possibly, a non-preparation of removal document for exports at the EOU gate, for which the heavy duty liabilities, penalty liabilities and confiscation liabilities under Customs Act, 1962 and or Central Excise Act, 1944, as arrived at, are totally uncalled for. The same are required to be set aside. Penalty for not preparing appropriate documents of removing the goods for export could be imposed only under Rule 210 of the Central Excise Rules, which are applicable to this EOU. That rule prescribes maximum penalty of Rs. 1000/-. There is no clear cut finding, as to on what document, if any, the goods were removed from the factory of the EOU and the notice under 210 Rule has been issued. Therefore, we refrain from determining any penalty under that rule. If the Exports had been made in contravention of the DEEC law, in as much as DEEC exports cannot be reckoned from an export from an EOU, then the DEEC availment by the appellant company should have been impugned by the Department and not the manufacturer and export from the EOU. From a question from the Bench, it could not be clarified whether the DEEC exports and fulfilment of export obligations under the Advance Licences have been impugned. The Department is free to take such action for the DEEC exports misdeclared, in the facts of this case, as available under law to them. In any case, for DEEC exports, made from Chennai, the jurisdiction of Commissioner of Central Excise and Customs, Visakhapatnam is not competent officer to invoke that jurisdiction by taking cognizance of the exports correctly or incorrectly made from Chennai. In view of our findings, this appeal is allowed with consequential relief, as per law.
Issues Involved:
1. Unauthorized removal of goods by 100% EOU to DTA. 2. Non-fulfillment of export obligations under various notifications. 3. Liability for customs and excise duties. 4. Confiscation and penalties under Customs Act and Central Excise Rules. Summary: 1. Unauthorized Removal of Goods by 100% EOU to DTA: M/s. ALSA Marine and Harvests Limited, a 100% Export Oriented Undertaking (EOU), was alleged to have removed goods to the Domestic Tariff Area (DTA) without payment of duty and without following prescribed procedures. The goods were subsequently exported under the DEEC Scheme by their Head Office in Chennai, which held Advance Licenses. The Commissioner found that the goods were not exported in the name of the 100% EOU but in the name of the domestic unit, thus failing to fulfill the export obligations of the EOU. 2. Non-fulfillment of Export Obligations: The Commissioner noted that M/s. ALSA failed to observe conditions of various notifications (Notfn. No. 13/81-Cus., 123/81-C.E., 57/94-C.E., and 1/95-C.E.) under which they received duty-free goods. The goods were not exported as required, and instead, were cleared to the DTA. This non-compliance led to the goods being liable for confiscation and the company being liable for penalties. 3. Liability for Customs and Excise Duties: The Commissioner determined that M/s. ALSA was liable to pay customs duty amounting to Rs. 27,53,915/- and central excise duty amounting to Rs. 2,77,430/-. Additionally, the duty payable on marine products cleared to the DTA was calculated at Rs. 4,34,79,737.10. The extended period of limitation under Section 11A(1) of the Central Excise Act, 1944, and Section 28(1) of the Customs Act, 1962, was applicable due to suppression of facts and fraudulent actions. 4. Confiscation and Penalties: The Commissioner ordered the confiscation of goods under Section 111(o) of the Customs Act, 1962, and Rule 173Q(1)(b) of the Central Excise Rules, 1944. Penalties were imposed under Section 114A and/or 112(a) of the Customs Act, 1962, and Rule 173Q(1) of the Central Excise Rules, 1944. However, the Appellate Tribunal found that penalties and confiscations under Rule 173Q could not be upheld as Chapter VA of the Central Excise Rules, 1944, applied to removals from an EOU. Appellate Tribunal Findings: The Tribunal concluded that no central excise duty could be levied on goods cleared from the EOU to Chennai as such removals were not allowed to be sold in India. The goods were eventually exported out of India, and thus, no duty was leviable under the Customs Act or Excise Act. The Tribunal set aside the penalties and confiscations and allowed the appeal with consequential relief. The Tribunal also noted that any issues related to DEEC exports should be addressed by the appropriate jurisdiction, not by the Commissioner of Central Excise and Customs, Visakhapatnam.
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