2023 (6) TMI 299 - AT - Central Excise

100% EOU - extended period of limitation - demand of duty under the wrong provisions - import of raw-material Polypropylene from Singapore for use in manufacture for the final product - applicability of N/N. 5/94-CUS read with Notification No. 52/2003-CUS dated 31.03.2003 read with Section 9A (2A) (ii) of Customs Tariff Act, 1975 - penalty u/s 112 of Customs Act, 1962 - HELD THAT - In view of specific amendment brought in 2008 in the statutory provisions, Anti Dumping Duty was clearly chargeable even if the impugned raw-material was contained in the finished goods cleared in DTA. Notwithstanding the decisions of the prior period, the Anti Dumping Duty was required to be paid by the appellant. It is found that though the show cause notice has not demanded duty under the provision of Central Excise Act particularly under section 3 and Notification No. 23/2003-CE dated 31.03.2003, but has still demanded the same as per calculations of aggregate Customs Duty which are the borrowed machinery provisions under section 3 of Central Excise Act, 1944. The lapse on the part of the department is not such which has denied any natural justice to the appellant. As they were aware of the nature of duty sought to be charged being under Section 3 of Central Excise Act, 1944 as is clear from their submissions made before the adjudicating authority, same therefore on merits is sustainable. However, on the point of limitation, the appellants had reflected all their transactions in their books of account only. Same could be detected on the basis of record by the visiting audit party. It is also found that the rejection of the plea relating to earlier periodic audits of the appellants by the adjudicating authority is not sustainable. Simply stating that audit does not check thoroughly but only on selected basis is nothing but exercise of undermining the purpose of departmental audit. It also does not bring on record as to what records were checked/not checked by the audit, while giving such findings. It is also found that department while demanding duty was not sure of the provision of law under which the same had to be demanded and even the penalty has been imposed under Section 112 of Customs Act, 1962, whereas the duty should have been demanded under Central Excise Act and penalty imposed under Central Excise Act/ Rules only. The demand can be sustained only for the normal period of limitation and that penalty under section 112 of Customs Act, 1962 does not sustain. Appeal is accordingly partly allowed.

Summary

Issues involved:
The case involves the imposition of Anti Dumping Duty on imported raw material used in the manufacture of finished goods by a 100% EOU, along with the applicability of Customs Duties and Central Excise Duty during the impugned period.

Summary:

Imposition of Anti Dumping Duty:
The appellant, a 100% EOU engaged in manufacturing Polypropylene Spun Bond Non-Woven Fabrics, imported raw material "Polypropylene" from Singapore for production. They also made DTA clearances after processing the raw material with the permission of the Development Commissioner. A show cause notice was issued demanding Anti Dumping Duty on the imported "Polypropylene" used for manufacturing finished goods. The appellant challenged this imposition citing various case laws to argue that Anti Dumping Duty could not be levied on raw material cleared in DTA. The Tribunal acknowledged the amendments in 2008 requiring payment of Anti Dumping Duty even on DTA clearances post that date, leading to the conclusion that the duty was chargeable despite prior judgments indicating otherwise.

Applicability of Customs and Central Excise Duty:
The appellant contended that the demand for duty under the Customs Act and its provisions was improper, emphasizing that Central Excise Duty should be levied on goods cleared in DTA by EOU. The Tribunal found that the demand based on the aggregate Customs Duty under Section 3 of the Central Excise Act, 1944, was valid, despite the show cause notice not explicitly invoking the Central Excise Act. However, the Tribunal ruled that the penalty imposed under Section 112 of the Customs Act, 1962, was not sustainable, as the duty should have been demanded under the Central Excise Act and any penalty imposed under the corresponding rules. The Tribunal also noted discrepancies in the department's handling of the case, particularly regarding the limitation period and penalty imposition.

Conclusion:
Based on the factual details presented, the Tribunal upheld the demand only for the normal limitation period and ruled that the penalty under Section 112 of the Customs Act, 1962, was not justified. Consequently, the appeal was partly allowed, with the decision pronounced on 06.06.2023.