2013 (10) TMI 262 - AT - Central Excise

Eligibility for Duty Exemption under Notification No. 108/95-C.E Suppression of Facts Duty Demand - Penalty - Held that - The goods cleared by assesse for use in the project being financed would not be eligible for duty exemption - Assesse was the project implementing authority and had issued the certificates certifying that the goods being sourced were meant for the project - Exemption Notification No. 108/95-C.E. exempted the goods supplied to United Nations or International Organizations for their official use or supplied to the project financed by the said United Nations or International Organizations which have been approved by the Government of India, from the whole of the duty of excise subject to certain conditions specified therein. The term International Organization , as defined in Explanation to the notification means an International Organization which the Central Government has so declared in pursuance of Section 3 of the United Nations (Privileges and Immunities) Act, 1947. Extended Period of Limitation - Penalty Cum-Duty Benefit - Held that - Neither the longer limitation period would be invokable under proviso to Section 11A(1) nor penalty under Section 11AC would be imposable - Assesse cannot be accorded of suppressing the relevant facts from the Department, more so, when the exemptions certificates had been countersigned AMRIT AGRO INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., GHAZIABAD 2007 (3) TMI 14 - SUPREME COURT OF INDIA - As regards the cum-duty benefit assesse had cleared the goods by availing full duty exemption under Notification No. 108/95-C.E - there was no justification for abatement of the duty which had not been paid at all. Penalty under Rule 26 - Held that - The penal provisions of Rule 26 were not attracted and the Commissioner s order imposing penalty was not sustainable - just because the same project had not availed of the exemption under Notification No. 108/95-C.E. it cannot be concluded that they had knowledge about the fact that JBIC was not an International Organization - Order modified.

Summary

Issues Involved:
1. Eligibility for duty exemption under Notification No. 108/95-C.E.
2. Applicability of extended limitation period under proviso to Section 11A(1).
3. Imposition of penalty under Section 11AC of the Central Excise Act.
4. Imposition of penalty on APTRANSCO under Rule 26 of the Central Excise Rules, 2002.

Issue-Wise Detailed Analysis:

1. Eligibility for Duty Exemption under Notification No. 108/95-C.E.:

M/s. Jyoti Structures Ltd. supplied parts of Transmission Towers to APTRANSCO without payment of duty, availing full duty exemption under Notification No. 108/95-C.E. The goods were for the Simhadri Vizag Transmission System Project, financed by Japan Bank International Cooperation (JBIC) and approved by the Government of India. However, the Central Board of Excise & Customs later clarified that JBIC is not an International Organization under the notification, rendering the goods ineligible for duty exemption. The Tribunal held that since JBIC is not an International Organization as defined in the notification, the goods cleared by M/s. Jyoti for the project financed by JBIC were not eligible for duty exemption.

2. Applicability of Extended Limitation Period under Proviso to Section 11A(1):

The duty-free clearances were made during August 2000 to December 2001 and February 2001 to January 2002. The show cause notices were issued on 25-3-2003 and 1-3-2002 respectively. The Tribunal noted that M/s. Jyoti had informed the department about the duty-free clearances and received confirmation from the jurisdictional Superintendent. Given this, the Tribunal concluded that M/s. Jyoti did not suppress relevant facts, and thus, the extended limitation period under proviso to Section 11A(1) was not applicable. Consequently, the duty demand of Rs. 86,12,754/- for the period August 2000 to December 2001 was time-barred.

3. Imposition of Penalty under Section 11AC of the Central Excise Act:

The Commissioner had imposed a penalty equal to the duty demand on M/s. Jyoti under Section 11AC. However, the Tribunal set aside the penalty, noting that M/s. Jyoti had acted in a bona fide manner, informed the department about the duty-free clearances, and obtained necessary certificates. Therefore, the imposition of penalty under Section 11AC was not warranted.

4. Imposition of Penalty on APTRANSCO under Rule 26 of the Central Excise Rules, 2002:

The Commissioner imposed a penalty of Rs. 25 Lakh on APTRANSCO under Rule 26. The Tribunal found no evidence that APTRANSCO knew JBIC was not an International Organization, as the duty exemption certificates were countersigned by the Secretary to the Government of Andhra Pradesh. The Tribunal held that the penal provisions of Rule 26 were not attracted and set aside the penalty on APTRANSCO.

Conclusion:

(a) The duty demand of Rs. 86,12,754/- against M/s. Jyoti was set aside, while the duty demand of Rs. 1,71,66,739/- for the period from 18-2-2001 to 20-1-2002 was upheld along with interest under Section 11AB.

(b) The penalties under Section 11AC on M/s. Jyoti and under Rule 26 on APTRANSCO were set aside.

The impugned order was modified accordingly.