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2010 (1) TMI 467 - AT - Central ExciseAssessment - a show-cause notice was issued to the appellants demanding excise duty of Rs. 1, 30, 50, 370/- in respect of the excise duty on indigenously procured capital goods. Debonding on conversion of EOU into DTA unit. Appellant contending that letter from Assistant Commissioner to development commissioner that excise duty liability discharged not appealed against by department. Correspondence indicating awareness of the appellant on duty liability. Held that - demand without filing appeal against assessment order sustainable as per Supreme Court decision in the case of Venus Enterprises v. Commissioner of Customs Chennai 2006 -TMI - 47663. Demand confirmed penalty set aside.
Issues Involved:
1. Whether the letter dated 18-5-2006 constitutes an assessment order. 2. Can a demand notice be raised for non/short payment of duty without appealing against the assessment order. 3. Applicability of excise duty on indigenously procured capital goods. 4. Impact of export obligation under the EPCG scheme on duty liability. 5. Entitlement to Cenvat credit and penalty imposition. Analysis: Issue 1: Assessment Order Contention The appellants argued that the letter dated 18-5-2006, issued by the Assistant Commissioner, should be considered an assessment order as it stated the discharge of excise duty liability on indigenous capital goods. However, the Tribunal found that the letter was an internal communication and not an assessment order, as there was no dispute regarding the duty liability. The communication was deemed a mistake, and the appellants' awareness of the duty liability was noted. Issue 2: Demand Notice and Appeal The appellants contended that since they did not appeal against the letter dated 18-5-2006, no demand for duty could be raised. However, the Tribunal held that even if the letter was considered an assessment order, the failure to appeal did not preclude raising a demand for short/ non-payment of duty. Citing relevant case law, the Tribunal rejected the appellants' argument in this regard. Issue 3: Excise Duty on Capital Goods The Tribunal acknowledged that the appellants were aware of the excise duty liability on indigenously procured capital goods and had not disputed the duty amount. The duty liability was not in question, and the appellants' silence on the matter was noted. The Tribunal upheld the duty demand based on this awareness. Issue 4: EPCG Scheme and Export Obligation The Tribunal found that the appellants' export obligation under the EPCG scheme did not impact the duty liability on capital goods. Any adjustments to the export obligation could be pursued separately with the DGFT authorities. The duty payment was deemed necessary regardless of export obligations. Issue 5: Cenvat Credit and Penalty While the appellants argued for Cenvat credit entitlement and highlighted their export performance, the Tribunal focused on the duty payment obligation. The duty demand was upheld, with the appellants allowed to claim credit. However, considering the miscommunication by the Assistant Commissioner, the penalty imposed on the appellants was set aside. In conclusion, the Tribunal partially allowed the appeal by upholding the duty demand but setting aside the penalty. The decision emphasized the duty payment obligation, disregarding the appellants' arguments regarding assessment orders, export obligations, and Cenvat credit entitlement.
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