2023 (8) TMI 939 - AT - Central Excise

Violation of principles of natural justice - impugned order passed without taking into consideration the request made by the appellant to the D.C. for extension of LOP/Green Card - HELD THAT - The issue of Show Cause Notice dated 04.10.2019 to the appellant appears premature and issued before the appellants request to the D.C. had been finalised. However, it is also noticed that the LOP/Green card was valid only up to 6.10.2014 and the department had issued the SCN after five years since its expiry giving sufficient time for the D,C. s office in coming to a decision in the matter - It is found that the Show Cause Notice does not contain any allegations of a blameworthy act by the appellant except his license was not renewed by the D.C. A person who sets out to do business is at times caught in circumstances beyond his control. It is for the department s concerned to ensure that such bonafide assessee are facilitated and not subjected to needless quasi-judicial proceedings which involve a penalty. To have a setback in business is not a punishable offence. Each situation has to be examined on its merit and hardship should not be caused to a compliant assessee just because a provision in law enables the discretionary imposition of penalties. The SCN has been issued invoking the B-17 bond executed by the appellant. Hence, although the action of the Commissioner (Appeals) in setting aside the penalty was right, he should also have asked the adjudicating authority to examine the duty liability in terms of the exit order given by the D.C. This is in line with Board s Circular No. 12/2008 dated 24.7.2008 issued from F. No. DGEP/FTP/13/2008-EOU G J and Circular No. 21/95 dated 10.3.1995 (F. No. 307/29/91-FTT) wherein it was stated that demand of duty can be confirmed only after a definite conclusion regarding the non-fulfilment of export obligation is arrived at by the Development Commissioner. Delays in receiving final permission must be taken up by the jurisdiction Customs / Central Excise authorities with the Development Commissioner / Director STP so that the matter is not delayed. The appellant has showed his willingness to pay the duty as per the normal process of debonding at the time of exit from EOU scheme. Matter remanded back to the learned Adjudicating Authority to decide afresh the issues relating to the demand for duty and interest only, after considering any written request from the appellant and hearing him in the matter, based on the in-principle exit order given by the D.C. and further developments in the matter if any - appeal disposed off.

Summary

Issues involved:
The issues involved in the judgment are the extension of LOP/Green card for an EOU, demand of duty forgone on capital goods, packing material, and finished/semi-finished goods under the Central Excise Act, 1944, imposition of penalty, and the invocation of extended period of limitation based on a B-17 bond.

Extension of LOP/Green card:
The appellant, an EOU, had applied for an extension of their LOP/Green card before its expiry, followed by continuous correspondence with the Development Commissioner (D.C.). Due to circumstances beyond their control, they requested an in-principle approval for exit from EOU, which was granted by the D.C. The Show Cause Notice issued before finalizing their request for extension was considered premature by the Tribunal. The duty liability needs to be reworked out based on the exit order given by the D.C.

Demand of duty and penalty imposition:
The appellant was issued a Show Cause Notice demanding duty forgone on various goods. The Adjudicating Authority confirmed the demand with interest and imposed a penalty, which was set aside by the Commissioner (Appeals). The Tribunal found that the penalty was rightly set aside, but the duty liability should be examined in light of the exit order by the D.C. The matter was remanded back to the Adjudicating Authority to determine the duty payable along with interest, considering the appellant's submissions regarding depreciation and destruction of goods.

Invocation of extended period of limitation:
The Tribunal noted that the invocation of the extended period of limitation was set aside by the Commissioner (Appeals) since the demand was issued based on a B-17 bond. The Tribunal emphasized the need for the duty liability to be reexamined based on the exit order given by the D.C., in line with relevant circulars and guidelines. The matter was remanded back to the Adjudicating Authority for fresh consideration.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority to decide afresh the issues relating to the demand for duty and interest, considering the in-principle exit order given by the D.C. The appellant's willingness to pay duty as per the debonding process at the time of exit from the EOU scheme was taken into account. The appeal was disposed of accordingly on 21.08.2023.