2019 (2) TMI 304 - AT - Central Excise

100% EOU - Demand of duty in respect of raw-material used to manufacture the goods on which duty is duly paid - N/N. 08/1997-CE. Held that - In case of M/s Sarla Polyester Limited 2007 (11) TMI 47 - CESTAT AHMEDABAD the facts were similar. There was allegation on M/s Sarla Polyester Limited was that they have cleared goods clandestinely from the 100% EOU, in the instant case the goods have been allegedly removed availing notification which was not available to the appellant. Other than this difference the facts are identical - It was held in the said case that Here duty will be paid on final product so demand on duty free inputs is unjustified. Demand not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty and imposition of penalty based on the allegations of not paying Central Excise duty properly and wrongly availing benefits of Notification No. 08/1997-CE. Invocation of extended period of limitation for issuing the demand of duty on raw-material used in the finished goods.

Analysis:

1. Confirmation of Demand of Duty and Imposition of Penalty:
The appeals were filed against the confirmation of demand of duty and imposition of penalty. The appellant argued that duty cannot be demanded on raw-material used for manufacturing finished goods cleared by a 100% EOU. They cited various decisions by the Tribunal and the Hon'ble Apex Court to support their argument. The Tribunal noted that the demand was in respect of raw-material used in the finished goods that were the subject matter of the earlier SCN in 2004. Referring to the case of M/s Sarla Polyester Limited, the Tribunal found the facts to be similar where duty was demanded on finished goods and raw-materials, leading to the conclusion that once duty is demanded on finished goods, it cannot be demanded on raw-material. The Tribunal followed the precedent decisions and allowed the appeals, emphasizing that duty on finished goods should be paid, and no duty is demandable on the raw material used in manufacturing diverted goods.

2. Invocation of Extended Period of Limitation:
The appellant argued that the demand was issued invoking the extended period of limitation, which they deemed unjustified. They contended that in 2004, the Revenue was already aware of the facts and had issued an SCN on the same set of facts. The Tribunal considered this argument and found that the demand in 2008 was in relation to the raw-material used in the finished goods for which a demand was raised in 2004. Relying on previous decisions and the principle that duty on raw-material cannot be demanded when duty on finished goods is already paid, the Tribunal held that the invocation of the extended period of limitation was not justified. Consequently, the appeals were allowed based on the principles established in the cited decisions.

In conclusion, the Tribunal allowed the appeals, emphasizing that duty on finished goods should be paid, and no duty is demandable on the raw material used in manufacturing diverted goods. The invocation of the extended period of limitation for issuing the demand of duty on raw-material was deemed unjustified based on the established legal principles and previous decisions cited during the proceedings.