2007 (9) TMI 205 - Commission - Central Excise

Clandestine removal by the EOU permission not taken for DTA clearance - benefit of exemption not. 8/97 would be applicable even to goods cleared to DTA without permission excise duty collected from customer was not deposited to the exchequer as required in terms of Sec. 11D - serious offence - applicant cannot be given complete immunity from payment of interest and imposition of penalty - since the amount of duty liability had been discharged in full, immunity from prosecution is granted

Issues Involved:
1. Regularization of delayed duty payment.
2. Applicability of Notification No. 8/97-C.E. for duty calculation.
3. Determination of duty rate: Central Excise Duty vs. Customs Duty.
4. Clandestine removal and procedural lapses.
5. Imposition of interest, penalty, and immunity from prosecution.

Issue-Wise Detailed Analysis:

1. Regularization of Delayed Duty Payment:
The applicant filed a Miscellaneous Petition to regularize the payment of duty by installments until 14-2-2007. The applicant admitted a duty liability of Rs. 89,58,603/- and paid the amount by February 2007, despite the deadline being December 2006. The Commission condoned the two-month delay in payment, considering the cooperation and the amount involved.

2. Applicability of Notification No. 8/97-C.E. for Duty Calculation:
The applicant claimed the benefit of Notification No. 8/97-C.E., which allows duty payable to be equal to Central Excise Duty for goods manufactured using indigenous raw materials. The department contended that since the goods were removed without permission, the notification was not applicable. However, the Commission observed that the goods were manufactured from indigenous raw materials, and despite the lack of permission, the benefit of Notification No. 8/97-C.E. should be extended based on precedents cited by the applicant.

3. Determination of Duty Rate: Central Excise Duty vs. Customs Duty:
The main point of contention was whether the duty should be Central Excise Duty or Customs Duty as per Section 3(1) of the Central Excise Act, 1944. The Commission decided that since the goods were manufactured using indigenous raw materials, the duty applicable would be under Notification No. 8/97-C.E., thus confirming the duty liability as Rs. 89,58,604/-.

4. Clandestine Removal and Procedural Lapses:
The case involved clandestine removal of goods without following necessary procedures and obtaining required permissions. The Commission noted that the applicant had not honored the confidence reposed by the policy on an EOU. Despite this, the duty liability was settled at Rs. 89,58,604/-, which had already been discharged by the applicant.

5. Imposition of Interest, Penalty, and Immunity from Prosecution:
The Commission imposed a simple interest of 10% per annum on the settled duty amount from the due date until the date of payment. Additionally, a penalty of Rs. 9 lakhs was imposed on the applicant, and Rs. 1 lakh each on the four co-applicants. However, the applicant and co-applicants were granted immunity from prosecution under the Central Excise Act, 1944.

Conclusion:
The Commission settled the duty amount at Rs. 89,58,604/- and imposed interest and penalties while granting immunity from prosecution. The decision was based on the fact that the goods were manufactured using indigenous materials and the benefit of Notification No. 8/97-C.E. was applicable despite procedural lapses. The Commission emphasized the need for compliance with procedural requirements and the importance of timely payment of duties.

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