2014 (9) TMI 842 - AT - Central Excise

100% EOU - Whether the DTA entitlement considered and fixed by the Development Commissioner can be questioned by the excise authorities or not and if there is any error in the computation of excise duty demand can be suo motu issued by the excise authorities - Benefit of concessional rate of excise duty under Notification No. 22/2003-C.E., dated 31-3-2003 - Held that - This issue has been settled by the decisions in the case of Amitex Silk Mills Pvt. Ltd. and Virlon Textile Mills Ltd. case 2005 (10) TMI 128 - CESTAT, NEW DELHI in favour of the appellant and against the Revenue. As regards the question whether clearances effected into the DTA under Para 6.8(a) of the Foreign Trade Policy, deemed exports could be considered or not, the Circular relied upon by the Revenue deals with the situation where supplies are made under Para 6.9 of the Foreign Trade Policy and not to clearances made under Para 6.8(a). If the Revenue has any doubt whether the clarification given in the letter dated 26-12-2008 would apply to computation of DTA entitlement under they should have referred the matter to the Development Commissioner before taking suo motu action. Therefore, the impugned order confirming the demand without seeking any clarification from the Development Commissioner is clearly unsustainable in law. The Development Commissioner is vested with the power to decide the quantum of DTA entitlements and not the Commissioner of Central Excise. In these circumstances, we are of the considered view that the matter has to go back to the adjudicating authority for making a reference to the Development Commissioner in this regard and thereafter, based on the clarification received from the Development Commissioner to consider whether any proceedings need to be initiated against the appellant or not. Thus, the appeal is allowed by way of remand - Decided in favour of assessee.

Summary

Issues Involved:
- Excise duty demand confirmation
- Entitlement to DTA clearances
- Inclusion of "deemed exports" in value calculation
- Benefit under Notification No. 22/2003-C.E.
- Authority to question DTA entitlement
- Computation of excise duty demand
- Reference to Development Commissioner
- Sustainability of impugned order

Excise Duty Demand Confirmation:
The appeal and stay petition challenged the Order-in-Original confirming an excise duty demand of Rs. 1,64,71,748/- from the appellant, M/s. Shreyas Intermediates Ltd., along with interest and penalty. The appellant disputed the denial of the benefit of concessional rate of excise duty under Notification No. 22/2003-C.E.

Entitlement to DTA Clearances and Inclusion of "Deemed Exports" in Value Calculation:
The main issue revolved around whether the value of "deemed exports" undertaken by the appellant should be included in deciding the entitlement to Domestic Tariff Area (DTA) clearances. The appellant argued that as per Foreign Trade Policy provisions and past tribunal and court decisions, they were eligible for the benefit of concessional rate of duty under Notification No. 2/95-C.E.

Authority to Question DTA Entitlement and Computation of Excise Duty Demand:
The tribunal considered whether the excise authorities could question the DTA entitlement fixed by the Development Commissioner and if any errors in the excise duty demand computation could be raised suo motu by the authorities. Previous decisions favored the appellant, emphasizing the role of the Development Commissioner in determining DTA entitlements.

Reference to Development Commissioner and Sustainability of Impugned Order:
The tribunal found that the impugned order confirming the demand without seeking clarification from the Development Commissioner was legally unsustainable. It was determined that the matter should be remanded to the adjudicating authority for reference to the Development Commissioner to decide on the DTA entitlements before further proceedings against the appellant. The appellant's right to be heard in case of further action by the department was emphasized, with all issues kept open.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Mumbai highlighted the key issues, arguments presented, legal interpretations, and the ultimate decision to remand the matter for clarification and proper consideration of the DTA entitlements in accordance with the law.