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TMI Blog2017 (10) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... r intimation to the Revenue. Thus, there is no violation either of the Notification or of the Foreign Trade Policy or the provisions of the Central Excise Act or the Customs Act. Once the said raw material etc have been issued for production and when in the course of production on the shop floor such raw material, work in progress, etc., are rejected, the same is equivalent to use in the course of production and does not amount to removal of inputs as such. Accordingly, the goods destroyed were used in connection with the production of the final products of the appellant. There is no clearance of any goods as alleged in the show cause notice and as such, the demand of duty is unsustainable. Appeal allowed - decided in favor of appellant. - E/58784-58786/2013, 53588-53590/2014, 51717-51719/2015 & 51714-51716/2015-EX [DB] - A/71172-71183/2017-EX[DB] - Dated:- 7-6-2017 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Puneet Bansal (Advocate) for Appellant Shri Rajeev Ranjan (Joint Commissioner) AR for Respondent ORDER Per: Anil Choudhary The issue in these appeals is whether the appellant Barco Electronic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year 2007 08, 2008 09 and 2009 10, inter alia, found that the appellant had written off as obsolete imported raw material, WIP, Semi-finished goods and finished goods, inventory valued at ₹ 13,41,62,899/- and had not paid duty involved thereon. The duty involved on such goods was worked out by the Department at ₹ 4,57,90,755/-. The Audit objections were issued on 3rd February, 2011. However, as observed by the Audit Team, certain goods imported duty-free by the appellant in accordance with the EOU scheme under the aforementioned notifications were not used in the manufacture of the articles for export or in connection with the production and were written off on purportedly becoming obsolete. Similar facts were observed by the Audit Team in respect of other goods namely, WIP, Semi-finished goods and finished goods. All these goods have been written off by the appellant on the premise of becoming obsolete. It further appeared that these facts show that the duty-free imported goods were not used for intended purpose and this was in violation of the conditions of the said notifications. Further, it appeared that these goods have been written off without payment off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for export out of India or cleared for home consumption within a period of three years from the date of import or procurement thereof and that on being asked to pay the duty liable to be paid on such goods, the appellant have not paid the same. It further appeared that the Semi finished goods and finished goods as observed by the Audit Team have neither been exported, nor the duty liable thereon has been discharged in terms of the proviso to Section 3 of the Central Excise Act. Further, Notification No.52/2003 CUS and 22/2003 CE do not permit writing off of the subject goods namely obsolete raw materials, WRAP, Semi finished or finished goods. 5. Based on the information furnished by the appellant and in accordance with the provisions of law/notifications, show cause notice for recovery of duty for the period 2007 08, 2010 11, show cause notice for the period 2011-12 and show cause notice for the period 2012-13, were separately issued by the Commissioner, Central Excise Noida as detailed here in above table. The appellant on being questioned by the Revenue submitted the details of the amount of inventory written off as obsolete raw material during the period April, 2013 to Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l inventory of so-called obsolete material, if any could not be ascertained. 6. It further appeared to Revenue that the appellant had bound themselves to pay duty in accordance with the Bond executed by them and as per the conditions stipulated in the aforementioned two notifications, but did not pay the amount of duty applicable on the goods written off. Thus, the appellant deliberately resorted to such modus-operandi and did not determine and pay the duty on the said goods in accordance with the notifications and as per proviso to Section 3(1) ibid. Thus, appellant contravened the provisions of the said Notifications read with Customs Act, 1962 and Central Excise Act, 1944 with intent to evade payment of duty. As the appellant unit is functioning under Self Removal Procedure, greater reliance is placed on the record-keeping and proper self-determination and payment of duty as required under law. Accordingly, the demands are proposed for the various periods by the different show cause notices with proposal to levy penalty under Section 11 AC of the Central Excise Act read with Section 114 A and 117 of Customs Act. Further penalty was also proposed on Shri Rakesh Kumar Vohra, Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2015 and are giving you the advance intimation of this activity. It is requested to kindly depute the concerned officer to supervise the process of destruction, if you deem fit necessary for the said activity. All these materials have been stored separately and as communicated above, we intend to physically destroy the aforesaid waste, remnant and scrap goods that arises during the process of manufacturing, production and packaging, on 03.03.2015 within our EOU premises. We also wish to bring to your kind notice that as in the past we will pay the duty on these items as waste scrap on the value realized by us. Hope the above you will find in order. Thanking you, Yours faithfully. 9. Referring to the aforementioned letter, the learned counsel stated that we have categorically informed along with the annexed list that the items in question have become un-usable/unfit for production and accordingly they are required to be physically destroyed in accordance with the said Notifications, 52/2003 CUS read with Para-6.15 (B) of Foreign Trade Policy 2009 14. It was further categorically mentioned that the said defective un-usable goods are stored separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification read with the Foreign Trade Policy, giving proper details of the goods which are been rendered defective and/or useless in the course of production which are intended to be destroyed. Only for the reason that the Department failed to attend the destruction process for the reason best known to them, the appellant, cannot be subjected to duty for the same. It is further urged that under the facts and circumstances, there is no case of any contumacious conduct, suppression, on their part. It is also admitted fact that the goods so destroyed, under proper intimation the department were disposed off under proper invoice and the applicable Excise Duty and Sales Tax have been paid on the same. That the transactions are duly recorded in their books of accounts and records in the ordinary course of business. Accordingly, the demand for extended period is unsustainable. Under the facts and circumstances no case of penalty is made out against the appellant company and its Manager Director and the Manager Commercial. The learned counsel further urges that from the allegations in the show cause notice, the same is self contradictory and vague and the demand is also not sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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