2017 (10) TMI 1269 - AT - Customs

Liability of interest - Simultaneous benefit of two schemes - Status Holder Incentive Scrips (SHIS) - Zero Duty Export Promotion Capital Goods (EPCG) - surrender of benefit under SHIS, on pointing out but without any interest - Public Notice dated 08th September, 2016 - Held that - the said Circular is clarificatory in nature, so it is applicable retrospectively - it appears that the Annexure to the Public Notice dated 08th September, 2016 has not been followed strictly in the instant case. The interest has also not been computed. When it is so, then we set aside the impugned order and remand the matter to the adjudicating authority to decide the issue de novo - appeal allowed by way of remand.

Summary

Issues:
- Availing double benefit for export promotion schemes
- Interpretation of Circulars and Public Notices
- Surrender of benefit and duty demand
- Interest computation and waiver
- Application of Circular retrospectively
- Compliance with Annexure to Public Notice
- Remand for de novo decision

Analysis:

1. Availing double benefit for export promotion schemes:
The case involved the assessee-Appellants enjoying the benefits of two export promotion schemes simultaneously, namely 'Status Holder Incentive Scrips (SHIS)' and 'Zero Duty Export Promotion Capital Goods (EPCG) Licences.' The dispute arose when the Department raised duty demand and penalty after issuing show cause notices based on information received by the DRI.

2. Interpretation of Circulars and Public Notices:
The counsel for the assessee-Appellants referred to Public Notice No.30/2015 and CBEC's Circular No.45/2016, emphasizing the flexibility allowed to exporters to choose between the schemes when availing simultaneous benefits. The counsel argued that the Board Circular is binding on the Department, citing the Supreme Court's decision in Paper Products Ltd. v. Commissioner of Central Excise.

3. Surrender of benefit and duty demand:
Although the assessee-Appellants surrendered the SHIS benefit after the show cause notices were issued, the Department still raised duty demand and penalty. The contention was that since the benefit had been surrendered, there should be no demand for duty or penalty.

4. Interest computation and waiver:
The Tribunal highlighted that interest on the surrendered benefit was mandatory, citing Supreme Court judgments that interest cannot be waived or restricted. The failure to compute interest was noted, indicating a mistake in the Department's approach.

5. Application of Circular retrospectively:
The Tribunal held that the Circular was binding on the Department and applicable retrospectively, relying on the Supreme Court's decision in Collector of Central Excise, Patna v. Usha Martin Industries.

6. Compliance with Annexure to Public Notice:
It was observed that the Annexure to the Public Notice dated 08th September 2016, specifying benefits in different years, was not strictly followed in the adjudication process. The interest computation was also found lacking, indicating procedural errors.

7. Remand for de novo decision:
Considering the totality of facts and circumstances, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision. The assessee-Appellants were granted a reasonable opportunity to present their case and submit additional evidence, if necessary, in compliance with the law.

In conclusion, the appeal filed by the assessee-Appellants was allowed by way of remand for a fresh adjudication, emphasizing the importance of following Circulars and Public Notices, computation of interest, and providing a fair opportunity for presenting the case.