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2024 (1) TMI 146 - AT - CustomsExtended period of limitation - 100% EOU - Demand of differential customs duty on 22 looms / Capital goods that were imported without payment of duty - Suppression of facts or not - HELD THAT - The appellant had sought permission from the department before clearing the goods. He had reported the matter in their ER-II returns. The issue also involves the interpretation of law with even a difference of opinion among the Tribunal Single Member Bench and its Division Bench on certain aspects of payment of duty. The appellant has not acted with dishonest or fraudulent intent and suppression of facts is not involved. This being so, question of invoking the extended time limit or imposing penalty does not arise. The merits of the issue not gone into, due to a lack of challenge on the said grounds, further the appeal on time bar is answered in favour of the appellant. Since the Show Cause Notice has been issued beyond the normal time-limit, the impugned order is set aside - appeal allowed.
Issues involved:
The issues involved in the judgment are the contravention of Exemption Notifications by an Export Oriented Unit, payment of duty through CENVAT credit, invocation of extended period of limitation, applicability of Rule 17(1) of Central Excise Rules, 2002, interpretation of law regarding payment of duty, and time-bar for issuing Show Cause Notice. Contravention of Exemption Notifications: The appellant, an Export Oriented Unit engaged in the manufacture and export of terry towels, was found to have contravened the provisions of Exemption Notifications by removing 22 looms imported without payment of duty. The appellant discharged Basic Customs Duty at a concessional rate of 50% through CENVAT credit account, which was deemed impermissible. The total customs duty payable on the clearance of the looms was Rs.9,58,783, but the appellant paid only Rs.6,31,584. The original authority confirmed the demand along with interest and imposed a penalty. The Commissioner (Appeals) upheld the adjudication order, leading to the appeal. Payment of Duty through CENVAT Credit and Invocation of Extended Period: The appellant contended that they cleared the capital goods by paying duty through CENVAT credit as per Rule 17(1) of Central Excise Rules, 2002 and availing the benefit of Notification 23/2003-CE. The appellant argued that the extended period of limitation should not have been invoked as they followed the prescribed procedure for removal of goods in the domestic area. The appellant maintained that they paid duty through CENVAT credit in good faith, believing it to be permissible under Rule 17(1). The appellant also highlighted discrepancies in the assessment of customs duty rates in the Show Cause Notice. Interpretation of Law and Time-bar: The Tribunal deliberated on whether the matter was time-barred. It was observed that the appellant had sought permission before clearing the goods and reported the transactions in their ER-II returns. The issue involved an interpretation of law, with differing opinions among Tribunal benches on certain aspects of duty payment. The Tribunal found that the appellant did not act fraudulently or dishonestly, and suppression of facts was not evident. Consequently, the extended time limit and penalty imposition were deemed unnecessary. The Tribunal ruled in favor of the appellant on the time-bar issue, setting aside the impugned order and allowing the appeal. Conclusion: The Tribunal concluded that since the Show Cause Notice was issued beyond the normal time limit without evidence of fraudulent intent or suppression of facts, the impugned order was set aside, and the appeal was allowed. The decision was pronounced in open court on 03.01.2024.
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