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2018 (12) TMI 1472 - AT - Central ExciseEOU - clearance of final products in domestic tariff area, without payment of duty - benefit of N/N. 30/2004-CE, dated 9.07.2004 - recovery of short paid duty - difference of opinion. Held that - There is a difference of opinion - the point of difference is Whether the appeal has to be rejected on merits as held by Hon ble Member(Technical) or the matter has to be referred to larger Bench as observed by Hon ble Member(Judicial)?
Issues Involved:
1. Applicability of Exemption Notification No. 30/2004-CE to 100% Export Oriented Units (EOUs) for Domestic Tariff Area (DTA) clearances. 2. Validity of the demand raised under the extended period of limitation. 3. Imposition of penalty under Section 11AC of the Central Excise Act, 1944. 4. Interest on the duty amount under Section 11AB of the Central Excise Act, 1944. 5. Validity of the undertaking given by the appellant and its impact on the limitation period. Detailed Analysis: 1. Applicability of Exemption Notification No. 30/2004-CE to 100% EOUs for DTA Clearances: The appellants, a 100% EOU, cleared their final products in the DTA without payment of duty, availing the benefit under exemption notification No. 30/2004-CE. The tribunal noted that the proviso to Section 5A(1) of the Central Excise Act, 1944, explicitly states that exemption notifications do not apply to EOUs unless specifically mentioned. The notification in question did not provide such an exemption for EOUs, making the appellants' claim unjustifiable. The tribunal referenced multiple cases, including Sarita Software & Industries Ltd and Ratnagiri Textiles Ltd, to support this interpretation. 2. Validity of the Demand Raised Under the Extended Period of Limitation: The appellants argued that the demand was barred by limitation, as the show cause notice was issued beyond the normal period. The Commissioner (Appeal) had set aside the penalty under Section 11AC, indicating that the facts were within the department's knowledge, negating suppression or misstatement. However, the tribunal found that since the appellants had admitted the duty liability in 2006 and provided an undertaking to pay, the extended period of limitation was applicable. The tribunal cited Atlas Dye Chem Industries and Vikram Enterprises to support the enforceability of the admitted duty liability despite the time elapsed. 3. Imposition of Penalty Under Section 11AC of the Central Excise Act, 1944: The Commissioner (Appeal) had set aside the penalty, stating that the issue was known to the department and there was no suppression or misstatement by the appellants. The tribunal upheld this view, noting that the penalty was uncalled for as the appellants had disclosed all relevant facts in their ER-2 returns. 4. Interest on the Duty Amount Under Section 11AB of the Central Excise Act, 1944: The tribunal confirmed the interest on the duty amount as per Section 11AB, as the duty liability was undisputed and admitted by the appellants. The interest is a statutory obligation and follows the confirmation of the duty demand. 5. Validity of the Undertaking Given by the Appellant and Its Impact on the Limitation Period: The appellants had provided an undertaking to pay the duty along with a bank guarantee. The tribunal held that this undertaking was enforceable and negated the argument of limitation. The tribunal emphasized that the undertaking was a commitment to pay the admitted duty, and failure to honor it constituted contumacious conduct. The tribunal dismissed the appeal, reinforcing that the duty demand was not time-barred due to the undertaking. Separate Judgments: Member (Technical): The appeal was dismissed, upholding the duty demand, interest, and rejecting the plea of limitation based on the undertaking provided by the appellants. Member (Judicial): Differed on the point of limitation, arguing that the extended period was not applicable as per the Commissioner (Appeal)'s findings. Suggested referring the issue of merits to a larger bench and set aside the demand on the grounds of limitation. Points of Difference: 1. Whether the appeal should be rejected as held by the Member (Technical) or allowed on the point of limitation as held by the Member (Judicial)? 2. Whether the appeal should be rejected on merits as held by the Member (Technical) or referred to a larger bench as suggested by the Member (Judicial)?
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