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TMI Blog2013 (3) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... W DELHI) has ruled that no duty requires to be paid if inputs are consumed that in an EOU, as it is treated as warehouse. Fine distinction drawn between private bonded house and 100% EOU are of no help to the Revenue, inasmuch as the issue on the said dispute stands answered by the Larger Bench in the case of Paras Fab International (Supra) which even Shri Mondal has also not denied. Further, the fact of payment of duty at the time of filing bill of entry for warehouse “Under Protest” will also not change the legal position that 100% EOU is required to pay duty only at the time of clearances of warehoused goods for home consumption. Thus the above ratio would apply in full force to the case in hand, as it is undisputed that the inputs procured by appellant, on which department has foregone duty, was consumed in the EOU for manufacturing of LPG and said LPG was sold to Public Sector Units. There is no allegation of removal of inputs as such in the entire case records. In the case in hand, it is undisputed that appellant themselves has discharged the duty foregone along with interest, on their own. There was no intimation or letter from departmental authorities directing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etroleum of their fractionation, production, liquefaction, petrochemical products and Polypropylene, Sulphur unrefined (by-product) and Petroleum Coke (residue). The appellant executed various bonds as required under the Customs Act for financing their unit as EOU and procured raw materials required for manufacturing of final products, as per the procurement certificates given to them by the lower authorities. Appellant procured various inputs without payment of customs duty and Central Excise duty, as per the provisions of Notification No. 52/2003-Cus., dated 31-3-2003 and Notification No. 22/2003-C.E., dated 1-3-2003 and availed the benefit of full exemption under the Notification No. 21/2002-Cus., dated 1-3-2002 and Notification No. 4/2006-C.E., dated 1-3-2006 for want of their final product i.e. Liquefied Petroleum Gas (Domestic) (hereinafter referred to as LGP). The lower authorities were of the view that the appellant having cleared LPG in the Domestic Tariff Area (DTA) without payment of duty, after having availed the benefit of Notification No. 21/2002-Cus. and Notification No. 4/2006-Central Excise were liable to pay duties forgone for the inputs which were used for manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. (iv) I confirm the demand of Central Excise duty of Rs. 19,08,281/- (Rupees nineteen lakh eight thousand two hundred eighty-one only) against the said M/s. Reliance Industries Limited, Jamnagar, under Section 11A of the Central Excise Act, 1944. Further, I appropriate the amount of Central Excise duty of Rs. 19,08,281/- paid by the said M/s. Reliance Industries Limited vide TR- 6 challan dated 15-10-2007. (v) I confirm the demand for interest as due and payable under Section 11AB of Central Excise Act, 1944 against the said M/s. Reliance Industries Limited, Jamnagar on the Central Excise duty confirmed at Sl. No. (iv) above. Further, I appropriate the interest amount of Rs. 62,019/- paid by the said M/s. Reliance Industries Limited vide TR-6 challan dated 15-10-2007. (vi) I impose penalty of Rs. 19,08,281/- (Rupees nineteen lakh eight thousand two hundred eighty-one only) against the said M/s. Reliance Industries Limited, Jamnagar, under Section 11AC of the Central Excise Act, 1944. However, in terms of the proviso to Section 11AC of Central Excise Act, 1944, if the duty as determined above and the interest payable thereon under Section 11AB is paid by the said M/s. Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -five per cent. of the penalty so determined. In terms of the second proviso to Section 114A of the Customs Act, 1962, the benefit of such reduced penalty under the first proviso shall be available only if the amount of penalty is also paid by the said M/s. Reliance Industries Limited, within the period of thirty days referred to above. (v) I confirm the demand for Central Excise duty of Rs. 3,43,909/- (Rupees three lakh forty-three thousand nine hundred and nine only) against the said M/s. Reliance Industries Limited, Jamnagar under Section 11A of the Central Excise Act, 1944. Further, I appropriate the amount of Central Excise duty of Rs. 3,43,909/- paid by the said M/s. Reliance Industries Limited vide TR-6 challan dated 19-10-2007. (vi) I confirm the demand of interest, as due and payable under Section 11AB of Central Excise Act, 1944 against the said M/s. Reliance Industries Limited, Jamnagar on the Central Excise duty confirmed at Sl. No. B(v) above. Further, I appropriate the interest amount of Rs. 1,222/- paid by M/s. Reliance Industries Limited vide TR-6 challan dated 19-10-2007. (vii) I impose penalty of Rs. 3,43,909/- (Rupees three lakh forty-three thousand nine hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange (NFE), as import of the LPG for supply under subsidy scheme is exempted from duty as per Notification No. 21/2002-Cus. and general exemption Notification No. 4/2006-C.E., supplies of LPG made by them to specified PSUs/organised sectors, notified under the said subsidy scheme were eligible to be counted for NFE. (d) It is his submission that although supplies of LPG to PSUs are otherwise were eligible for calculations of NFE, same did not have the status of deemed export under the Foreign Trade Policy and are considered as supplies under Domestic Tariff Area, they took up the matter with the Government, made representations for examining their proposal to grant status of deemed export to supplies of LPG made to PSUs under subsidy scheme, but the said proposal did not materialise despite there being express provisions in the Foreign Trade Policy for counting such clearances towards calculation of NFE. (e) It is his submission, that as imports were eligible for Customs duty under Notification No. 21/2002-Cus. and LPG locally manufactured for supply under the said subsidy scheme was also exempt from Central Excise duty under Notification No. 4/2006, hence they cleared the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely apply to this case inasmuch as it is noted that appellant had utilised the warehoused goods for the manufacture in EOU. It is his submission that ratio laid down by the Larger Bench of Hon ble Tribunal in Paras Fab International case would clearly indicate that the appellant need not have paid any Customs duty or CVD as the goods were not cleared by ex-bond bill of entry. He would take us through Paragraphs 8, 9, 10 and 11 of the said Larger Bench decision and refer to Para 12 wherein the reference has been answered. It is also his further submission that on merits of the case they are not required to discharge any duty liability on the goods which were imported and duty has been foregone in the light of the Larger Bench decision, though they are not seeking any refund of the amount already paid by them in these cases. (h) It is his submission that the first proviso to clause 3 to Notification No. 52/2003-Cus. and the second proviso to clause 6 of Notification No. 22/2003-C.E. provided that exemptions under the said notifications shall not be available in respect of inputs if the finished goods are either non-excisable or if imported or leviable to nil rate of Customs dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for home consumption under the Customs Act, 1962 and consequently, the goods which were consumed for manufacturing of finished goods cannot be considered as clearance of inputs. It is also his submission that the adjudicating authority has erred in not appreciating the ratio laid down by the Larger Bench i.e. when imported the goods pursuant to in-bond warehousing bills are taken into 100% EOU and used within 100% EOU and are not cleared as such by 100% EOU for home consumption, stage for such payment of duty on such imported goods is not reached and therefore there cannot be any demand duty on such imported goods. (j) It is his submission that though the appellant would have argued the issue on merits itself and sought the benefit of the Larger Bench decision as well as various decisions, they are not pressing that point. It is his submission that the said point is raised for the purpose of non-imposition of penalties by the adjudicating authority. Learned counsel would also take us through the letter dated 15-10-2007, wherein they had calculated the amount have been paid under the provisions of Section 28(2B) of Customs Act, 1962 has been sought by them in the said letter. Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44. 8. On perusal of record, it is noted that the inputs which were procured by the appellant, were consumed in an EOU, after filing in-bond bills of entry or documents like re-warehousing certificate. These documents are not disputed by the Revenue. This would mean that the goods imported or procured locally, were warehoused in the appellant s licensed warehouse and it is admitted that inputs were not cleared as such but were consumed. At this juncture we have to note and record that, in a similar issue, the Larger Bench of Tribunal in the case of Paras Fab International (supra) has ruled that no duty requires to be paid if inputs are consumed that in an EOU, as it is treated as warehouse. We find that the ratio of the Larger Bench s decision in Paras Fab International was followed by this Bench in the appellant s yet another case, wherein Revenue was demanding NCCD, SHE Cess and Education Cess on imported crude petroleum oil, proposition negatived by recording following findings :- 14. We also find favour with the submissions raised by the respondents that in any case, in any way of the matter, no duty was required to be paid by them in view of the law declared by the Larger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensed as a private bonded warehouse in terms of Section 58 of the Customs Act. However, he submits that even than it cannot be said to be at par with any private bonded warehouse, inasmuch as EOU scheme is a special scheme with the main objective to promote exports and the EOU is required to execute a single all purpose B-17 bond in prescribed form undertaking to fulfil the condition stipulated in the exemption notification for EOU. He also submits that there are special procedures enacted for EOUs like procurement of business goods without payment of duty against CT-3 certificate. The detailed procedures are laid down in C.B.E. C. manual, required to be followed by the EOU. As such, he submits that though EOU is a private bonded warehouse but is governed by the warehousing provisions contained in Chapter-IX of the Customs Act. They cannot be equated with an ordinary private bonded warehouse where the imported goods are kept temporarily and are cleared as such for home consumption on payment of requisite customs duty by filing ex-bond bill of entry. As against the above submission, the respondents have submitted that a bare reading of Section 59 of the Customs Act, 1962 which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods for home consumption. To arrive at the decision other than the one declared by the Larger Bench, would amount to sitting in the appeal over the Larger Bench judgment, which is not permissible under the law. As a Division Bench we feel bound by the law declared by the Larger Bench. By following the law declared by the Larger Bench decision in the case of Paras Fab International that 100% EOU is not required to discharge any duty liability in respect of the imported goods warehoused in their premises and used for the purpose of manufacturing in-bond, we hold that respondents were not required to pay any NCCD, Education Cess and SHE Cess. As such, on this point also the appeals filed by the Revenue are to be rejected. We order accordingly. Cross objections filed by the respondents also get disposed off. In our considered view the above ratio would apply in full force to the case in hand, as it is undisputed that the inputs procured by appellant, on which department has foregone duty, was consumed in the EOU for manufacturing of LPG and said LPG was sold to Public Sector Units. We find that there is no allegation of removal of inputs as such in the entire case records. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the availment of exemption notification for LPG, filing returns by the appellant who is an EOU, would mean that they had no intention to suppress material facts. This fact of filing returns indicating entire transactions of EOU is not disputed by Revenue authorities. In the case in hand, we find that there was no need to issue any show cause notice to appellant as the duty liability either Customs or Central Excise is the same as has been calculated by the appellant. We find that in a similar situation Hon ble High Court of Karnataka, in the case of ADECCO Flexione Workforce Solutions Limited - 2012 (26) S.T.R. 3 (Kar.) has held as under :- Both these appeals are preferred by the assessee challenging the order passed by the Tribunal as well as the Appellate Commissioner who have held that the assessee is not liable to pay any penalty under Section 76 of the Finance Act, 1994 and therefore, set aside the order passed by the lower authorities imposing penalty. 2. Facts are not in dispute. The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-sec. (3) of Section 73 of the Finance Act, 1994 categorically s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of Section 73 of the Act. It can be seen from the above reproduced judgment that their Lordships have clearly held that, in similar situations as is in the case in hand, show cause notice should not have been issued. 9.2 We find that provisions of Section 11(2B) are pari materia to the provisions of Section 28(2B) of the Customs Act, 1962, and have, in our view, the ratio of Hon ble High Court judgment in ADECCO Flexione Workforce Solutions Limited case will cover the issue of imposition of penalty under Section 11AC of the Central Excise Act, 1944. 9.3 In our considered view the action of Revenue authorities in issuing of show cause notice on the appellant demanding duty is like looking into the mouth of gifted horse, as we have hereinabove held that the appellant need not have paid any duty on duty free inputs procured by them, as there is no dispute that inputs were consumed in EOU and issuance of show cause notice demanding duty, interest and imposition of penalties, in our opinion, is a self-destructive action in the light of decision of Larger Bench of Tribunal in the case of Paras Fab International (supra.) 10. We also find strong force in the contention raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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