2013 (5) TMI 431 - AT - Central Excise

Notification No. 23/2003 - Denial of benefit - 100% EOU cleared their final product in DTA by availing the benefit of Notification No. 23/2003 - As per revenue the respondent were required to satisfy the condition No. 3 of the notification which prescribes requisite permission from DTA in respect of goods specified in paragraph 6.8 (a), (b), (d) and (h)- Held that - In the present case revenue has taken altogether a new ground which was neither the subject matter of SCN nor of the order-in-original or the order of Commissioner (Appeals). Thus, appeal cannot be entertain on the above ground raised. Utilization of Cenvat credit Held that - In terms of Rule 17, clearances by 100% EOU in DTA have to be a payment of appropriate duty by debiting the account current required to be maintained for this purpose. As the appellants paying duty through account current, the duty already paid from the Cenvat credit would be credited to their said account. Confiscation Original adjudicating authority had confiscated the excess found raw material and finished good with an option to redeem the goods on payment of redemption fine. Commissioner (Appeals) set aside the confiscation on the ground that the weighment and stock verification was not proper inasmuch as the same was on eye estimation basis - Held that - Revenue has not shown any documentary evidence to reflect upon the fact that the physical stock taking was made by actual weighment of the goods and by making inventories. Therefore, Commissioner (Appeals) decision is upheld.

Summary

Issues:
1. Allegation of duty payment under Notification No. 23/2003.
2. Utilization of cenvat credit by the appellant.
3. Confiscation of excess raw material and finished goods.
4. Proper weighment and stock verification for confiscation.

Analysis:

Issue 1: Allegation of duty payment under Notification No. 23/2003
The case revolved around the appellant, a 100% EOU, availing benefits under Notification No. 23/2003 for duty payment at a prescribed rate of 16%. The revenue alleged non-compliance with condition No. 3 of the notification, requiring permission for specified goods clearance. The original adjudicating authority upheld the demand, which was later reversed by the Commissioner (Appeals). The Tribunal noted that the revenue raised a new ground post-appeal, not part of the original grievance. Citing legal precedent, the Tribunal dismissed the new ground as impermissible, thus ruling in favor of the appellant.

Issue 2: Utilization of cenvat credit by the appellant
The appellant had paid excise duty using cenvat credit accumulated during its DTA unit phase, even after becoming a 100% EOU. Rule 17 mandates duty payment from a current account for clearances by 100% EOUs in DTA. The appellant agreed to pay duty through the current account, with a proposal for crediting the duty already paid from cenvat credit. The Tribunal found this proposal fair and directed the appellant to pay duty accordingly, ensuring credit transfer from cenvat account.

Issue 3: Confiscation of excess raw material and finished goods
The original authority confiscated excess raw material and finished goods, offering redemption on payment of fines. However, the Commissioner (Appeals) overturned this decision citing improper weighment and stock verification, done on an eye estimation basis. Additionally, it was noted that 100% EOUs are not obligated to maintain RG-1 register. The Tribunal upheld the Commissioner's decision, emphasizing the lack of documentary evidence for proper stock-taking, leading to non-interference in the confiscation reversal.

Issue 4: Proper weighment and stock verification for confiscation
The Tribunal highlighted the absence of documentary evidence from the revenue to support physical stock-taking through actual weighment and inventories. Due to this lack of proof, the Tribunal chose not to intervene in the Commissioner's decision to set aside the confiscation. Consequently, the revenue's appeal was disposed of in accordance with the above analysis.