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2014 (7) TMI 269 - AT - Central Excise100% EOU - demand of duty on the goods in question, namely, grey fabrics manufactured cleared to DTA units - benefit of Notification No. 8/97 - Held that - it is evident that the appellant obtained raw materials duty free i.e. without payment of duty removed clandestinely from M/s. Jamshri, Gopal Jajoo and M/s. Pooja Textiles, without the cover of a CT-3 certificate and without the cover of a Central Excise invoice. This position has been clearly admitted. If that be so, the appellant cannot legitimately claim the benefit of Notification No. 8/97, even for the period prior to 2-6-1998 and, therefore, the claim of the appellant in this regard has to be rejected. - Decided against the assessee. Regarding benefit of Notification No. 2/95 - clearance with the permission of the Development Commissioner - held that - Duty demand has been confirmed on the entire quantity without allowing the benefit of Notification No. 2/95, which is not correct. Therefore, the duty liability needs to be recomputed by extending the benefit of Notification No. 2/95 in respect of clearances made within the permissible limit and only in respect of the excess quantity, the benefit of the notification would not apply. - matter has to be considered afresh by the adjudicating authority and the duty liability needs to be recomputed. Therefore, we remand the matter back to the adjudicating authority for consideration afresh for redetermination of duty liability and the consequential penal liabilities - Decided in favour of assessee.
Issues:
1. Duty liability on clandestinely manufactured and cleared fabrics. 2. Benefit of Notification No. 8/97-C.E. for duty exemption. 3. Benefit of Notification No. 2/95-C.E. for concessional rate of duty. Issue 1: Duty liability on clandestinely manufactured and cleared fabrics: The case involved M/s. Volant Textile Mills Ltd., a 100% EOU, accused of clandestinely manufacturing and clearing fabrics without payment of duty, evading substantial Central Excise duty. The investigation revealed collusion with various entities for these activities. A show cause notice was issued demanding excise duty, interest, and penalties. The duty demands were confirmed, including penalties on the Managing Director. The appellant contested the duty demands, leading to the appeal. Issue 2: Benefit of Notification No. 8/97-C.E. for duty exemption: The appellant argued they had requisite permissions for clearing fabrics into DTA during the impugned period. The adjudicating authority acknowledged the goods were allowed to be sold in India by the Development Commissioner but did not extend the benefit of Notification No. 8/97-C.E., which exempted goods produced in a 100% EOU wholly from raw materials produced in India. The appellant's claim for this benefit was rejected based on the duty-free procurement of raw materials. Issue 3: Benefit of Notification No. 2/95-C.E. for concessional rate of duty: The appellant also sought the benefit of Notification No. 2/95-C.E., providing a concessional rate of duty subject to specific conditions. The adjudicating authority found the appellant did not provide evidence to show compliance with the entitlement conditions. However, the appellant had obtained post facto permissions for certain clearances in DTA, making them eligible for the concessional rate of duty. The duty liability was to be recomputed by extending the benefit of this notification for permissible clearances. In conclusion, the Tribunal remanded the matter back to the adjudicating authority for a fresh consideration of duty liability and penal liabilities, allowing the appeals by way of remand. The judgment highlighted the importance of complying with notification conditions for duty exemptions and concessional rates, emphasizing the need for proper documentation and adherence to legal provisions in EOU operations.
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