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2018 (11) TMI 355 - AT - Central ExciseApplicability of period of limitation where B-17 bond has been furnished by 100% EOU - goods manufactured and cleared in DTA by use of raw-material procured from EOU as well as from indigenous Vendor against invalidation of Advance Authorization - imports or not - exemption under Serial No. 3 of Notification No. 23/2003-CE dated 31.03.2003 denied - suppression of facts or not Held that - The procurement of raw material from 100% EOU/Advance License Holder, the manufacture of goods out of such raw material and removal of finished goods in DTA under Exemption Notification 23/03-CE under exemption serial No. 3 were disclosed to the department, therefore, there is absolutely no suppression of fact on the part of the appellant. Moreover, the issue involved is of grave interpretation of Notification. The Supreme Court in the case of Favourite Industry 2012 (4) TMI 65 - SUPREME COURT OF INDIA extended the benefit of same notification interpreting same issue involved in the present case, therefore, the appellant had bonafide belief that since the raw material procured is produced or manufactured within India, they are entitled for exemption on the DTA clearances; therefore, we agree with this proposition that the appellant had no malafide intention to evade the duty of excise. The contention of Ld. Commissioner that since B17 Bond was executed by the appellant limitation shall not apply is not sustainable - on the issue of limitation particularly in respect of 100% EOU, the demand is not sustainable on limitation as the SCN was issued beyond the period of 1 year - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Eligibility for exemption under Serial No. 3 of Notification No. 23/2003-CE. 2. Applicability of extended period for demand under Section 11A(1) of the Central Excise Act. 3. Enforcement of B-17 Bond for recovery of adjudged dues. 4. Allegations of suppression of facts and malafide intention. 5. Duplication of demand. Issue-wise Detailed Analysis: 1. Eligibility for Exemption under Serial No. 3 of Notification No. 23/2003-CE: The appellant, a 100% EOU, claimed exemption under Serial No. 3 of Notification No. 23/2003-CE for goods cleared in the Domestic Tariff Area (DTA). The Revenue denied this exemption, arguing that the goods should be treated as imported due to amendments in Notification No. 46/2004-CE and Notification No. 29/2007-CE. The appellant contended that raw materials procured from another EOU or indigenous vendors should be considered as manufactured in India, thus qualifying for the exemption. The Tribunal did not delve into the merits of this argument, focusing instead on the issue of limitation. 2. Applicability of Extended Period for Demand under Section 11A(1): The appellant argued that the demand was time-barred as the Show Cause Notice (SCN) was issued on 01.04.2011 for the period 01.04.2006 to 31.03.2008. They claimed a bona fide belief in their entitlement to the exemption and full disclosure to the department, negating any suppression of facts. The Tribunal agreed, noting that the appellant had regularly filed ER-2 returns and declared their use of the exemption, thus the extended period of five years was not applicable. The Tribunal cited several judgments supporting this view, including Emcure Pharmaceuticals and Madhu Silica Pvt. Ltd. 3. Enforcement of B-17 Bond for Recovery of Adjudged Dues: The adjudicating authority had directed the enforcement of the B-17 Bond for recovery of dues. The appellant argued that the department lacked the power to enforce the bond directly and that such enforcement should be pursued through a civil court. The Tribunal agreed, stating that the B-17 Bond could only be enforced for recovery of confirmed demands and not bypass the adjudication process. This position was supported by the Tribunal's decision in the case of Shri Dudhganga-Vedganga SSK Ltd. 4. Allegations of Suppression of Facts and Malafide Intention: The appellant maintained that there was no suppression of facts or malafide intention, as all relevant information was disclosed to the department. The Tribunal found merit in this argument, noting that the appellant's actions were transparent and in line with their understanding of the exemption. The Tribunal emphasized that the issue involved complex interpretation of the notification, and the appellant's belief in their entitlement was bona fide. 5. Duplication of Demand: The appellant also argued that the demand was duplicated in four instances, where the removal of finished goods was considered at both the original and re-issue stages. The Tribunal did not specifically address this issue in detail, as the appeal was decided on the ground of limitation. Conclusion: The Tribunal set aside the impugned order on the ground of limitation, without delving into the merits of the case. The appeal was allowed, and the demand was deemed unsustainable as the SCN was issued beyond the permissible period. The Tribunal's decision was based on established legal precedents and a thorough examination of the facts, emphasizing the importance of adherence to procedural requirements and the absence of suppression or malafide intent on the appellant's part.
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