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2025 (3) TMI 740 - AT - Central ExciseShort payment of duty under provisions of Section 11A(1) of the Central Excise Act 1944 alongwith interest as per provisions of Section 11AB of Central Excise Act 1944 - benefit of Notification No. 23/2003-CE dated 31.03.2003 claimed for the DTA clearances done - HELD THAT - It is settled preposition in law that the exemption Notification need to be interpreted strictly according to wordings of the notification. Hon ble supreme Court has in case of Dilip Kumar Company 2018 (7) TMI 1826 - SUPREME COURT (LB) observed that Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. The basic of the EOU scheme is for promotion of the exports. From para 6.8 of the Foreign Trade Policy reproduced above it is quite evident that the entire production of the EOU is to be exported and the DTA sales are permitted in certain specific conditions subject to the restrictions and conditions imposed. The Exemption N/N. 23/2003-CE which is in respect of the DTA sales made by an EOU needs to be considered in an strict manner in accordance with the scheme. The appellant soon after starting their EOU started clearance of the scrap/ goods in DTA. The intentions of the appellant by making such huge clearances of scrap and goods within a period of less than a year from the date of setting of EOU and starting export production and clearances is itself indicative of the ill intentions of the appellant. For the reason that the appellant has deposited the entire amount of duty along with the interest during the investigation and prior to issuance of Show Cause notice the proceedings in respect of the amounts so deposited could not have been initiated against the appellant and the same should have been closed as per law. Penalty has been imposed upon these appellants only on the basis of the statement of Appellant 2 without recording any act of omission or commission committed by the appellant 2 3 and 4 leading to the holding that the goods were liable for confiscation. The penalty has been imposed only for their knowledge about the activities of Appellant 1 which evidently they would have acquired in normal course of business. Penalty under Rule 26 could not have been imposed for the reason of knowledge but could have been imposed only for positive acts of omission or commission for which the goods were held liable for confiscation. In absence of any positive findings recorded in the impugned order to this effect there are no merits in the penalties imposed under rule 26 on the employees of the Appellant. Conclusion - i) Demand of duty and interest is upheld and also the appropriation of the same against the amounts already deposited prior to the issuance of show cause notice. ii) Penalties imposed under Section 11AC of The Central Excise Act 1944 read with Rule 25 of the Central Excise Rules 2002 and FTP is set aside. iii) Penalties imposed upon Appellant 2 Appellant 3 and appellant are set aside. Appeal allowed in part.
14,38,279.00 (Rupees Fourteen lakhs Thirty eight thousand Two hundred & Seventy nine only) against payable interest.
6.16 In view of the above, I find that the party has made the payment of duty and interest only after being pointed out by the department. The party has not made a voluntary payment but has made the payment under protest. Hence, the extended period of limitation is invokable in this case as the party has not fulfilled the conditions of the notification and has contravened the provisions of the Central Excise Act. Therefore, the demand for the short payment of duty and interest is confirmed along with the imposition of penalties under Section 11AC of the Central Excise Act, 1944, and Rule 25 of the Central Excise Rules, 2002. 6.17 Regarding the penalties imposed on the individuals under Rule 26 of the Central Excise Rules, 2002, I find that the individuals were in charge of and responsible for the conduct of the business of the company. They were aware of the contraventions and were involved in the decision-making process that led to the short payment of duty. Therefore, the penalties imposed on them are justified. 6.18 In conclusion, the appeals filed by the appellants are dismissed, and the impugned order is upheld. The demand for duty and interest is confirmed, and the penalties imposed on the company and the individuals are sustained.
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