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TMI Blog2007 (10) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... tered under the Co-operative Society Act, 1960 and engaged in the manufacture and sale of excisable goods namely sugar, molasses etc. falling under Chapter 17 of the Schedule to Central Excise Tariff Act, 1985; that all the appellants were issued with demand notices on the ground that they have not exported the apportioned sugar allotted for export vide different Orders issued by the Government of India, Ministry of Food, Directorate of Sugar, New Delhi; that however, the appellants produced copies of export obligation fulfilment certificates issued by the respective export agencies; that the certificates issued by export agency are null and void for the recovery of Additional Excise Duty inasmuch as the export agency is not a Government organisation and the certificates are not specified documents for the purpose of waiver of AED under Sugar Export Promotion Act, 1958 (in short SEPA); that as per Section 7(1) of SEPA where sugar delivered by any owner falls short of export quota fixed for it, by any quantity, there shall be levied and collected on so much of the sugar dispatched from the factory for consumption in India as is equal to the said quantity, a duty of Excise @ Rs. 45.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort quota for every individual sugar factory by issuing specific release orders; (iv) that as per the provisions of Section 6 of SEPA read with Rule 4 of SEP Rules, the said quota is bound to be delivered by the sugar factory to the export agency as per the demands made by the export agency; (v) that in case if the sugar factory fails to deliver the apportioned quantity of sugar released to the sugar factory under the release orders, in spite of the demands made by the export agency as per Rule 4 of SEP Rules, then as per Section 7 of the SEPA, the additional duty @45.55 per quintal becomes leviable on the said quantity of sugar and the sugar factory becomes liable to pay the said duty; (vi) that as per Section 8 of the SEPA the export agencies are given liberty either to sell on its own the quantity of sugar obtained by them for export purpose in the Indian market or to allow the sugar factory to sell the part or the entire quantity of sugar released to the said factory in Indian market; (vii) that after reading the SEPA together with SEP Rules that the AED under Section 7 of the SEPA becomes leviable only when the sugar delivered by the factory to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export obligation; (xii) that their demands are time-barred since the extended period of limitation is not at all available to the department inasmuch as that the issue is fully known to the department at least since 1993-94 as during the year 1993-94 the department had conducted enquiries with some sugar factories on the issue in hand and the National Federation of Sugar had clarified about the issue to the Central Excise department. Also the export agency had sent certain letters to some sugar factories explaining that, they as an export agency appointed by the Government, are fully empowered to allow the sugar factories to sell the export quota sugar in Indian market and the Central Excise department has no authority to demand AED on such quantity of sugar and hence the allegation of suppression of facts etc. with mala fide intention made against the appellants holds no water and as such the extended period is not available to the department - they relied upon various judgments including the Hon ble Supreme Court s decision in the case of CCE v. Champer Drugs [1989 (40) E.L.T. 276 (Supreme Court)]; (xiii) that the extended period cannot be applicable inasmuch as all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all the five appellants including their submissions made during hearing of modification of the stay petitions and oral submissions made during the personal hearings. As the facts of the case and the grounds of appeals are common in all the five appeals, all the appeals are being taken to pass a common single order. Since all the appeals are more than six months old, it has been decided to take up the main appeals by waiving the pre-deposit. In fact, the appellant i.e. Shree Pandurang Sahakari Sakhar Karkhana Ltd., was ordered to pre-deposit Rs. 2.50 lakhs and the same was paid by them. 5.1 The short question to be decided in all the five appeals is that whether the appellants are required to pay AED under Section 7 of the SEPA read with Section 11A of the Act and Rule 9(2) of the Central Excise Rules. Once the above issue is decided in favour of the department, the next issue to be decided is whether the extended period under proviso to Section 11A of the Act is invocable against all the appellants. The department has held that since all the appellants failed to export apportioned quota of sugar they are liable to pay AED as envisaged in Section 7 of the SEPA in addition to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t stands taken by the appellants and the department, all the important provisions of SEPA have to be understood properly. The relevant Sections of SEPA which are relevant for the present issue are reproduced as under : 3. Export Agency : (1) For the purpose of this Act, the Central Government may by notification in the Official Gazette specify as an export agency and company within the meaning of the Companies Act, 1956, or any body of the persons established or recognized as a body corporate by or under any other law for time being in force (2) Where any such company or other body corporate has been specified as an export agency, it shall be lawful for such agency to perform all or any of the functions of an export agency, under this Act, notwithstanding anything to the contrary contained in the memorandum or articles of association of the company or, as the case may be the law applicable thereto. 4. Fixation of quantity of sugar for purpose of export : (1) The Central Government may by notification in the Official Gazetted, fix from time to time the quantity of sugar which may be exported during any period, and, in fixing such quantity, the Central Government shall have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act. Provided that, if the export agency is of opinion that having regard to the quality of the sugar delivered to it by any owner, or to the expenses involved in transporting the sugar from one place to another, or to the delay likely to be involved in exporting it or to the conditions prevailing in the markets for sugar whether in or out of India, or to any other relevant circumstances, it is expedient so to do the export agency may sell the whole or any part of the sugar in India and may, if it thinks fit, purchase such quantity of sugar as it may consider necessary for export at the appropriate time. (2) For the purpose of sub-section (1), the export agency may itself sell sugar or permit the owner to sell the whole or any part of the export quota in his custody at a price approved by it on condition that the sale proceeds are payable to it 5.4 From the above provisions it is clear that sugar is a controlled commodity and it has to be regulated keeping the circumstances namely, quantity available in India, quantity required for domestic consumption and also to earn simultaneously foreign exchange by exporting excess quantity. For achieving the above twin purposes, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35(E) - In exercise of the powers conferred by sub-section (i) of Section 3 of the Sugar Export Promotion Act, 1958 (30 of 1958), and in supersession of the Notification of the Government of India, in the Ministry of Food, Agriculture, Community Development and Cooperation (Department of Food) No. GSR 2779 dated the 18th December, 1969, except as respects things done or omitted to be done before such supersession the Central Government hereby specifies, with immediate effect the State Trading Corporation of India Ltd., New Delhi and the Indian Sugar General Industry Export Import Corpn. Ltd., New Delhi as export agencies for the purpose of the said Act. (No. 4-3/90-ES) Sd/- (S.K.TRIPATHI) JT. SECRETARY (SUGAR) 6.1 From the above there cannot be any doubt with regard to the status of the export agency. By the above Notfn. the Central Government notified State Trading Corporation of India Ltd., New Delhi and the Indian Sugar General Industry Export Import Corporation Ltd., New Delhi as export agencies. Whether the certificates issued by the above agencies are relevant or not will be discussed later. 7.0 The other dispute in the present appeals are that the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation remains unfulfilled. But the decision to use the export quota either to export it out of India or sell it in Indian market itself lies with the export agency under Section 8 of SEPA. The Section 8 reads that export agency shall take all practical measures to export sugar delivered to it . However, the proviso to Section 8 allows the export agency, by taking into consideration the conditions prevailing in the markets for sugar, whether in or out of India, or to any other relevant circumstances, to sell the whole or any part of sugar in India. Upto the above situation the Central Excise department has no role over it. The Central Excise department will come into play only when the export agency informs the department in writing that such and such factory to whom export quota has been fixed by the Central Government, has failed to deliver the said quantity on demand made by it and therefore, they are liable to pay AED in addition to the normal rate of duty under Section 7 of SEPA. But from the facts of the appeals it is seen that the export agencies have not made any such demand on the appellants to deliver sugar to the agencies for the purpose of export. The export agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch is the control in so far as export quota is concerned. Thus the department need not concern about the export quota till such time they receive from the export agency communication on diversion of export quota. Further, under Section 8 of SEPA, the export agency has been empowered to divert the export quota to Indian market taking various conditions or circumstances mentioned therein. This fact has been very well brought out in one letter No. PFW/94/4018 dated 1-10-94 of Indian Sugar General Industry Export Import Corporation Ltd., one of the export promotion agency notified under Section 3 of SEPA, addressed to Shri Bhagavati Sahakari Sakhar Karkhana Ltd., Dist. Kolhapur. The said letter was issued to the above sugar factory with reference to the apprehension of the Central Excise department contemplating for issuing demand notice for payment of AED on the undelivered quantity. The export agency informed the above factory that as an export agency appointed by the Government of India under SEPA, they are empowered under Section 8 of the said Promotion Act either to take delivery of the export quota for physical export or divert the same to Indian market. Accordingly, they info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the quota has been fulfilled or otherwise. It is possible that, quota may have been modified by the said authority or a decision to export has been reviewed so as not to require any export from the appellant s factory, keeping in mind the extent of sugar already exported from the country. 6. Therefore, I hold that the entire exercise of initiating the proceedings in terms of the provisions of Section 7 of the Sugar Export Promotion Act, 1958 by the Central Excise authorities on their own without a corresponding advise from a designated authority under the said Act is illegal and cannot be supported. 7. In view of the discussions above, I allow the appeal of the appellants and consequently the impugned order-in-appeal is set aside. 7.3 From the above it can be seen that it is the export agency who can alone question as to whether or not the quota has been fulfilled or otherwise. In view of the above discussions the impugned orders confirming the duty on the export quota fixed against each appellant is not maintainable. 8.0 While confirming the duty in the impugned orders the respective adjudicating authority held that certificates issued by the export agency cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be said that the sugar factory has fulfilled the export obligation . This is also a wrong conclusion arrived at by the respective adjudicating authorities. Enough discussions have been given to the effect that it is the right of the export agency to deal with the export quota when it considers that the export quota fixed for each factory may be sold in the Indian market. Once it is decided to divert the export quota to Indian market, it has to be done only after obtaining the permission from the Directorate of Sugar, New Delhi. There are few correspondences which show that export agency approached the Directorate of Sugar with request to divert the export quota to Indian market. This is necessary, because as already discussed, sugar is a controlled commodity and it has to be regulated. Therefore, when the Central Excise department issued demand notices, some of the appellants approached the export agency and appraised the matter and under that situation the export agency issued certificates certifying fulfilment of export quota by the individual factory. The nomenclature used by the export agency (i.e. export quota fulfilled) may be wrong, but the reason behind is that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a gold or silver or iron which can be kept for ever. Under the above circumstances the department should have enquired the matter in the same year or the following year on the basis of copy of the release order received from the Directorate of Sugar. In the above circumstances, the allegations of fraud, collusion or wilful mis-statement or suppression of facts cannot be invoked. The above contentions are also supported by the decision of the Apex Court in the following cases : (i) Collector of Central Excise v. Chemphar Drugs Liniments [1989 (40) E.L.T. 276 (Supreme Court) (ii) Padmini Products v. Collector of C.Ex. [1989 (43) E.L.T. 195 (Supreme Court)] (iii) Cosmic Dye Chemical v. Collector of Central Excise, Bombay [1995 (75) E.L.T. 721 (Supreme Court)] Thus on time-bar aspect also the appellants have succeeded. 11.0 Since this order is common for all five appellants, a separate mention has to be made in respect of appellant namely Shree Pandurang SSK Ltd., Solapur. The appellant contended that there was an excess demand of duty of Rs. 11,53,053/- occurred due to wrong calculation of quantity of sugar. From the record it is observed that there are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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