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2024 (6) TMI 1104 - AT - Central ExciseClandestine removal - clearances made beyond the period mentioned in Annexure-I certificate - case of the Department is that the Appellants have received the Annexure 1 Certificates from buyers only for the financial year 2007-2008, however, the goods have been cleared beyond the said financial year thereby violating the conditions stipulated in the Impugned Notification r/w with the 2001 Rules - extended period of limitation - HELD THAT - On verification of invoices it was seen that the goods cleared on the basis of the Annexure-I certificates included goods of invoices for the period beyond financial year mentioned. Thus, duty has been demanded alleging that clearances of the Annexure-I certificates do not cover the clearances of goods and thus the benefit of notification is not available. It is to be noted that the manufacturer buyer has used the goods for export and there is no dispute raised in this regard. The allegation of the department revolves around the wrong financial year mentioned in Annexure-I certificate - There is no allegation that excess goods have been cleared. The only allegation is that the financial year mentioned does not match with the invoices. The same financial year has been copied continuously in most of the Certificates. The notification or Rules does not put forward any condition to mention financial year. In the present case, it is the manufacturer buyer who has to make the application before the AC/DC of his jurisdiction. The said application is forwarded to the appellant who has to mention the details of clearances and submit a copy of this application to the Range Superintendent of his jurisdiction - The said application having been verified by the concerned officers of his jurisdiction, the financial year for the specified quantity of goods is not a relevant criteria for the reason that all these clearances are supported by invoices and detailed description of the goods cleared. So, also verified by the jurisdictional authorities of the manufacturer buyer. The demand of duty has been made on a minor infraction of wrongly stating the financial year in the application. Such a procedural lapse has to be condoned. The demand of duty alleging that the appellant has violated the conditions of the Notification r/w Rules 2001 cannot sustain. Extended period of limitation - Suppression of facts or not - HELD THAT - Though it is alleged in the show cause notice that the appellant has suppressed facts with intent to evade payment of duty there is no positive act of suppression established against the appellant. It is also seen that all the certificates are endorsed by the jurisdiction officers at the time of clearance as well as receiving the goods by the manufacturer buyer. The appellant has filed ER1 returns declaring the exemption availed by them and also furnished copies of the relevant certificates. In such circumstances, the demand raised alleging suppression of facts with intent to evade payment of duty cannot sustain. The issue on limitation is answered in favour of the appellant. The impugned order is set aside - Appeal allowed.
Issues Involved:
1. Validity of demand for Central Excise Duty based on clearances made beyond the period mentioned in Annexure-I certificates. 2. Procedural vs. substantive conditions for availing exemption under Notification No. 43/2001-CE (NT). 3. Liability for duty payment: whether it lies with the appellant or the buyer. 4. Invocation of the extended period of limitation. 5. Imposition of interest and penalties under Section 11AC of the Central Excise Act, 1944. 6. Erroneous confirmation of demand for specific amounts. Detailed Analysis: 1. Validity of Demand for Central Excise Duty: The core issue was whether the demand for duty was justified when clearances were made beyond the financial year mentioned in Annexure-I certificates. The Tribunal noted that the appellants cleared goods without payment of duty under Notification No. 43/2001-CE (NT) based on Annexure-I certificates. The department argued that these certificates were valid only for the specified financial year, and any clearances beyond this period violated the notification and the 2001 Rules. However, the Tribunal found that the financial year mentioned in Annexure-I certificates was a procedural requirement and not a substantive condition for availing the exemption. There was no allegation that the goods were not used for the intended purpose (export), and no excess quantity of goods was cleared. Therefore, the demand for duty based on this procedural lapse was not sustainable. 2. Procedural vs. Substantive Conditions: The Tribunal emphasized that the requirement to mention the financial year in Annexure-I certificates was procedural. The substantive condition was the use of goods for export, which was not disputed. The Tribunal cited several cases, including Mangalore Chemicals and Fertilizers Ltd. v. Deputy Commissioner, to support the principle that substantive benefits of a notification cannot be denied due to procedural lapses. Consequently, the procedural error of mentioning the wrong financial year did not warrant the denial of exemption. 3. Liability for Duty Payment: The appellant argued that any liability for duty should fall on the buyer, as they executed the bond and undertook to use the goods for export. The Tribunal agreed, noting that the 2001 Rules place the responsibility for compliance with the buyer. Therefore, demanding duty from the appellant was excessively harsh and unwarranted. 4. Invocation of Extended Limitation Period: The Tribunal found that the extended period of limitation could not be invoked. The appellant had filed ER-1 returns and submitted Annexure-I certificates to the department, which acknowledged them. There was no suppression of facts with intent to evade duty. The Tribunal referenced cases like Pushpam Pharmaceuticals Company v. Collector of Central Excise to support this conclusion. Thus, the demand for the period from April 2008 to March 2012 was time-barred. 5. Imposition of Interest and Penalties: Since the demand for duty was unsustainable, the imposition of interest and penalties under Section 11AC of the Central Excise Act, 1944, could not be justified. The Tribunal highlighted that mens rea (intent to commit fraud) was necessary for imposing penalties, which was not established in this case. Cases like Comm. Ofc. Ex., Chandigarh v. Pepsi Foods Ltd. were cited to support this view. 6. Erroneous Confirmation of Demand: The Tribunal identified specific errors in the confirmation of demand, including: - Incorrect confirmation of Rs. 71,252 for clearances within the financial year 2010-2011. - Erroneous confirmation of Rs. 5,60,112 for clearances allowed within one year from the date of issue, not restricted to the financial year. - Incorrect inclusion of Rs. 19,627 as paper cess, which was already paid. The Tribunal concluded that these errors further invalidated the demand. Conclusion: The Tribunal set aside the impugned order and allowed the appeal with consequential reliefs. The demand for duty based on the procedural lapse of mentioning the wrong financial year in Annexure-I certificates was not sustainable, and the extended period of limitation could not be invoked. Consequently, interest and penalties were also set aside.
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