2014 (7) TMI 737 - AT - Central Excise

Concessional rate of duty under Notification No.23/2003-CE dated 31.3.2003 - Violation of condition of notification - Non achievement of the positive Net Foreign Exchange - Held that - The NFE calculations for the corresponding year were enclosed as relied upon document along with the show-cause notice issued to the appellant and, therefore, the appellant cannot take plea that they did not know that they had not achieved positive NFE during the year 2003-04 and 2004-05. amendment to the Foreign Trade Policy for computation of NFE on 5 years block basis came only in 2008 and prior to that, NFE was required to be calculated on a year-to-year basis. In the present case, the demand pertains to the year 2003-04 and 2004-05 - The condition of the notification is that the appellant should have achieved positive NFE. It is for the appellant to prove achievement of positive NFE before claiming the benefit of exemption. In the present case, the appellant has not fulfilled this condition - appellant has not made out a prima facie case grant of stay - stay granted partly.

Summary

Issues:
- Duty demand confirmation based on non-achievement of positive Net Foreign Exchange (NFE)
- Allegation of violation of principles of natural justice
- Calculation of NFE for a block period of five years
- Appellant's claim regarding Development Commissioner's permission for clearances to DTA
- Applicability of the amendment in the Foreign Trade Policy to the demand period

Analysis:

Issue 1: Duty demand confirmation based on non-achievement of positive NFE
The appeal challenged an Order-in-Original confirming a duty demand on the appellant for not achieving positive NFE during 2003-04 to 2004-05. The appellant argued that the notice confirming the duty demand was issued after the concession was availed, violating principles of natural justice. The appellant also contended that the policy required NFE fulfillment over five years, not just two years. However, the Development Commissioner's letters indicated the appellant's failure to achieve positive NFE, leading to the duty demand confirmation.

Issue 2: Allegation of violation of principles of natural justice
The appellant claimed a violation of natural justice principles as they were not given an opportunity to respond to the Development Commissioner's letter before the duty demand confirmation. The appellant relied on a Bombay High Court decision emphasizing the importance of notice and opportunity. However, the Tribunal found that the appellant failed to prove achievement of positive NFE as required by the exemption notification, dismissing the natural justice violation claim.

Issue 3: Calculation of NFE for a block period of five years
The appellant argued that NFE should be calculated over a five-year block period, citing a policy amendment in 2008. However, the Tribunal clarified that prior to the amendment, NFE was calculated yearly. As the demand pertained to 2003-04 and 2004-05, the appellant's failure to achieve positive NFE during these years was established, rendering the five-year calculation argument irrelevant.

Issue 4: Appellant's claim regarding Development Commissioner's permission for clearances to DTA
The appellant contended that clearances to DTA were made with the Development Commissioner's permission, implying compliance with NFE requirements. However, the Tribunal emphasized that the appellant needed to provide evidence of achieving positive NFE to claim the exemption benefit. Since evidence showed non-fulfillment of NFE conditions, the claim based on clearances with permission was dismissed.

Issue 5: Applicability of the amendment in the Foreign Trade Policy to the demand period
The appellant raised the question of whether the 2008 amendment to calculate NFE over five years should apply to the demand period of 2003-04 and 2004-05. The Tribunal clarified that the amendment did not retroactively apply and that the Development Commissioner's letters from 2010 indicated the appellant's failure to meet NFE requirements for the relevant years.

In conclusion, the Tribunal directed the appellant to make a pre-deposit of 50% of the duty demand within eight weeks, emphasizing the need to protect revenue interests and the lack of a prima facie case for granting a stay. Failure to comply would result in the dismissal of the appeal without further notice.