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2016 (6) TMI 352 - SC - Central ExciseDemand of duty and imposition of penalty - Section 11AC of the Central Excise Act, 1944 - Texturised Yarn - Clandestine removal of goods - 100% EOU - Non-fulfillment of obligation of export of finished goods and the goods have been cleared without permission of the competent authority - Appellant submitted that even if it is held that finished goods were removed by the assessee without requisite permission from the Development Commissioner, central excise duty is leviable in terms of Section 3(1) of the Act. Held that - on a careful scrutiny of the authority in CCE v. NCC Blue Water Products Ltd. 2010 (9) TMI 13 - Supreme Court of India , we are of the considered opinion that it concurs with the view expressed in SIV Industries Ltd. v. CCE & Customs 2000 (3) TMI 162 - SUPREME COURT OF INDIA . The circular dated 05.01.2004 came into existence after the Larger Bench decision in Himalaya International Ltd. v. Commissioner of C.Ex. Chandigarh 2003 (5) TMI 79 - CEGAT, NEW DELHI . There was no justification for distinguishing the decision in SIV Industries Ltd. (supra). The Technical Member who authored the judgment after the decision in NCC Blue Water Products Ltd. (supra) was brought to the notice of the tribunal has absolutely improperly noted that the circular dated 05.01.2004 was not brought to the notice of this Court. The Court in NCC Blue Water Products Ltd. case had not based its conclusion on the basis of the circular dated 13.02.2002. It is clear as day that it has concurred with the ratio laid down in SIV Industries Ltd. (supra). It has been clearly opined that the expression allowed to be sold in India used in proviso to Section 3(1) of the Act would be applicable only to sales made in DTA of the production by 100% EOUs, which are allowed to be sold into India as per the provisions of the Exim Policy. The said authority has also made it clear that the circular issued in 2002 is in consonance with the authority in SIV Industries Ltd. (supra). Thus, the view expressed by NCC Blue Water Products Ltd. (supra) has given the stamp of approval to the circular. It is a binding precedent on all the courts and the tribunals under Article 141 of the Constitution of India. The Larger Bench of the Tribunal, as stated earlier, could not have distinguished the judgment in SIV Industries Ltd. (supra). The later circular issued on 05.01.2004 on which reliance was placed by the revenue before the tribunal which has been taken note of in the impugned judgment is clearly indicative of an erroneous approach. The decision in NCC Blue Water Products Ltd. (supra) was bound to be followed and the tribunal could not have stated that 2004 circular was not taken note of. The tribunal should have appropriately appreciated that this Court was interpreting the statutory provision and it is also worthy to note that after the judgment delivered in SIV Industries Ltd. (supra) an amendment was brought into the provision. Therefore, the transaction prior to the date of amendment would be governed by SIV Industries Ltd. (supra) which has been followed in NCC Blue Water Products Ltd. (supra). Be it clarified that we are not concerned with the amended provision in this case. Therefore, the judgment and order passed by the tribunal and that of the adjudicating authority are set aside. The assessee shall be liable to pay the excise duty as per Section 3(1) of the Act. The competent authority is directed to compute the duty accordingly and proceed thereafter as per law. - Decided in favour of appellant
Issues Involved:
1. Whether the goods cleared by the appellant, a 100% Export Oriented Unit (EOU), and sold in India without permission are assessable under proviso to Section 3(1) of the Central Excise Act, 1944. 2. Whether the entire sales value of the goods removed clandestinely is required to be considered as cum-duty. 3. Whether the ratio of law declared in the case of CCE Delhi vs. M/s. Maruti Udyog Ltd. applies to the present case. 4. Whether the matter is required to be remanded for quantification of the duty by treating entire realization as cum-duty price. 5. Whether the penalty imposed upon the appellant would get reduced consequent to the re-quantification of duty. Detailed Analysis: 1. Assessment under Proviso to Section 3(1): The appellant, a 100% EOU, cleared goods without the permission of the Development Commissioner. The core issue was whether such clearances should be assessed under the proviso to Section 3(1) of the Central Excise Act, 1944. The tribunal initially held that the goods cleared by the 100% EOU and sold in India, whether with or without permission, should be assessed under the proviso to Section 3(1) and that exemption under Notification No. 125/84 would not apply. This decision was based on the Larger Bench's interpretation, which distinguished the Supreme Court's ruling in SIV Industries Ltd. that the proviso applies only to sales allowed by the Development Commissioner. 2. Cum-Duty Price Consideration: The appellant argued that the entire sales value should be treated as cum-duty price, meaning that the price charged included the component of excise duty. The Member, Judicial, concurred with this view, stating that no duty had been recovered from buyers and that the realization should be treated as cum-duty. This stance was supported by the precedent set in CCE Delhi v. M/s. Maruti Udyog Ltd., where the Supreme Court held that the entire realization should be considered as cum-duty price. 3. Applicability of CCE Delhi vs. M/s. Maruti Udyog Ltd.: The tribunal noted a difference of opinion on whether the ratio of law declared in CCE Delhi vs. M/s. Maruti Udyog Ltd. applied to the present case. The Member, Judicial, believed it did, supporting the treatment of the entire realization as cum-duty price. The Member, Technical, disagreed, holding that the transactions were artificial and should not be treated as cum-duty price. 4. Remand for Duty Quantification: Given the differing views, the matter was remanded for recalculating the quantum of duty by treating the entire realization as cum-duty price. The tribunal needed to determine the correct duty amount based on this interpretation. 5. Penalty Reduction: The Member, Judicial, also opined that the penalty imposed on the appellant should be recalculated based on the re-quantified duty. This meant that the penalty would be equivalent to the newly determined duty amount. Supreme Court's Conclusion: The Supreme Court held that the tribunal erred in not following the binding precedent set in SIV Industries Ltd. and NCC Blue Water Products Ltd., which clarified that the expression "allowed to be sold in India" applies only to sales permitted by the Development Commissioner. The court emphasized that the tribunal should have adhered to these precedents and the applicable circulars, which were in consonance with the Supreme Court's rulings. The appeals were allowed, setting aside the tribunal's and adjudicating authority's orders. The competent authority was directed to compute the duty under Section 3(1) of the Act, treating the entire realization as cum-duty price and recalculating the penalty accordingly.
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