2024 (10) TMI 676 - AT - Central Excise

Eligibility for concessional rate of duty under Notification No. 23/2003-CE for Domestic Tariff Area (DTA) clearances - Invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944 - Imposition of penalty on the Deputy General Manager under Rule 26 of Central Excise Rules, 2002. Whether the appellant are entitled to the concessional rate of Central Excise duty on the clearances effected by them on Ammonium Carbonate Liquor and Ammonium Sulphate? - HELD THAT - It is a matter of record that the appellants have fulfilled the export obligation and only the by-products as mentioned above have been cleared at the concessional rate of duty availing benefit of Notification No. 23/2003-CE dated 31.03.2003. It can be seen from the provisions of Para 6.8 (g) of the Foreign Trade Policy that by-products can be cleared at the concessional rate of duty if 100% EOU has already achieved positive NFE. It is found that appellant have fulfilled their export obligation and there is no allegation that NFE has not been achieved by the appellant of permissible export products and therefore, the provisions relating to clearance of its by-products in Domestic Tariff Area at the concessional rate of duty are undoubtedly available to the appellant, more so when NFE has been positive in case of the appellant - the appellant have rightfully availed the benefit of concessional rate of duty under Notification No. 23.2003-CE dated 31.03.2003 an clearances of its by products. Extended period of limitation - HELD THAT - The appellant have been informing the department about the by-products which have been cleared by them availing concessional rate of duty under Notification No. 23/2003-CE dated 31.03.2003. It is found that element of fraud, mis-representation, suppression of facts with intention to evade duty are not present in this case and therefore, there are no legally sustainable to invoke extended time proviso under Section 11A of Central Excise Act, 1944 for demanding Central Excise duty. The first show cause notice is barred by period of limitation also. Imposition of penalty on the Deputy General Manager under Rule 26 of Central Excise Rules, 2002 - HELD THAT - There are no reason for imposition of penalty on Shri A.K.Nayak and accordingly, the penalty imposed an appellant Shri A.K.Nayak is set aside. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:

1. Eligibility for concessional rate of duty under Notification No. 23/2003-CE for Domestic Tariff Area (DTA) clearances.
2. Invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944.
3. Imposition of penalty on the Deputy General Manager under Rule 26 of Central Excise Rules, 2002.

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Rate of Duty:

The primary issue in this case was whether the appellant was entitled to a concessional rate of duty for the clearance of by-products, namely Ammonium Carbonate Liquor and Ammonium Sulphate, into the Domestic Tariff Area (DTA) under Notification No. 23/2003-CE. The department contended that these by-products were not similar to the goods exported, thus violating Para 2(ii)(a) of the notification. The appellant argued that the by-products were covered under the Letter of Permission (LoP) and were similar to the goods exported, fulfilling the conditions for concessional duty. The tribunal found that the appellant had fulfilled the export obligations and that the by-products were included in the LoP, allowing them to be cleared at concessional rates under the Foreign Trade Policy provisions. The tribunal relied on previous decisions, such as DCM Hyundai Limited vs. CCE, Chennai, to conclude that the appellant rightfully availed the benefit of the concessional rate.

2. Invocation of Extended Period of Limitation:

The second issue was whether the extended period of limitation under Section 11A of the Central Excise Act, 1944, was applicable. The department issued a show cause notice for the period June 2009 to May 2014, invoking the extended period. The appellant contended that all relevant details had been disclosed to the authorities, negating any suppression or misrepresentation. The tribunal noted that the appellant had regularly informed the department about the clearances and availed the concessional rate of duty. It found no evidence of fraud, misrepresentation, or suppression of facts with the intent to evade duty. Consequently, the tribunal held that the invocation of the extended period was not legally sustainable, rendering the first show cause notice barred by limitation.

3. Imposition of Penalty on the Deputy General Manager:

The third issue involved the imposition of a penalty on the Deputy General Manager, Shri A.K. Nayak, under Rule 26 of the Central Excise Rules, 2002. The appellant argued that there was no evidence of Shri Nayak's involvement in any willful avoidance of Central Excise duty and that he had no personal gain from any alleged infringement. The tribunal, having allowed the appeals on merits, found no reason to impose a penalty on Shri Nayak. It set aside the penalty, emphasizing the lack of evidence for any wrongdoing on his part.

Conclusion:

The tribunal concluded that the impugned orders-in-appeal lacked merit and were set aside. The appeals were allowed, affirming the appellant's entitlement to the concessional rate of duty and rejecting the invocation of the extended period of limitation and the imposition of penalties.