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TMI Blog2018 (11) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ocured is produced or manufactured within India, they are entitled for exemption on the DTA clearances; therefore, we agree with this proposition that the appellant had no malafide intention to evade the duty of excise. The contention of Ld. Commissioner that since B17 Bond was executed by the appellant limitation shall not apply is not sustainable - on the issue of limitation particularly in respect of 100% EOU, the demand is not sustainable on limitation as the SCN was issued beyond the period of 1 year - appeal allowed - decided in favor of appellant. - Appeal No. E/10145/2015-DB - A/12527/2018 - Dated:- 1-11-2018 - MR. RAMESH NAIR, MEMBER (JUDICIAL) And MR. RAJU, MEMBER (TECHNICAL) For Appellant: Shri P. Paranjape (Advocate) For Respondent: Shri Sameer Chitkara (A.R.) ORDER Per: Ramesh Nair The appellant is 100 % EOU engaged in the manufacture of Copper Phthalo Cyanine Blue falling under chapter 32 of the First Schedule of Central Excise Tariff Act, 1985. Apart from export of goods, they have also cleared the goods in DTA which was manufactured by using raw-material procured from indigenous Vendor against invalidation of Advance Authorizatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. 145 (SC) wherein the Supreme Court has allowed the exemption in respect of goods manufactured by EOU by use of raw-material supplied by another EOU on the ground that the finished goods produced is out of raw-material produced or manufactured in India. Though this judgment was for the past period but the appellant was availing exemption on that basis only, therefore, there is no malafide intention on the part of the appellant. He further submits that since the appellant is an EOU, procurement of raw-material from EOU or from Advance License Holder is well within the knowledge of the department and while clearing the final product, in the invoice as well as in there ER-2 return claimed the exemption Notification under 23/2003-CE declaring the particular serial number 3 of the exemption entry. Therefore, right from procurement of raw-material from EOU/Advance License Holder, manufacture of finished goods and clearances thereof were very much within the knowledge of the department, therefore, there was no suppression of fact. He further submits that the Ld. Commissioner has discarded the aforesaid submission of the appellant on limitation by alleging that since the appellant have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion regarding the raw material procured from Vendor who had availed deemed export benefit is imported of goods, was made effective only from 06.07.07., without prejudice he submits that as per the condition prior to 06.07.07, the exemption claimed by the appellant on this category of finished goods manufactured will be valid. Without prejudice, he submits that the demand stands duplicated as in four cases removal of finished goods was considered at its original stage as well as re-issue stage, this demand has to be reduced to this extent. 4. Sh. Sameer Chitkara Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 5. We have carefully considered the submissions made by both the sides and perused the records, we find that the issue involved is that whether the appellant is entitled for exemption under Serial No. 3 of Notification No. 23/03-CE. In the given facts that the finished goods cleared in DTA were manufactured out of the raw material received either from 100% EOU or from the Vendor whose supply of raw material is under deemed export category. After hearing both the sides, we are of the opinion that the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority for the reason that Bond B17 can be enforced only in case where the demand of duty is determined in accordance with law. In the present case undisputedly a SCN was issued and demand was proposed under proviso to section 11A(1), wherein there is no explanation carried out for the purpose of limitation of 1 year or 5 years for clearance made from 100% EOU. Therefore, once the demand is raised under proviso to section 11A(1), the ingredient of proviso for invoking longer period of 5 years should exist in the facts of the case. B17 Bond is only enforced for recovery of the confirmed demand otherwise whole process of adjudication such as issuance of SCN, adjudication, appeal, etc will not be required and straight away, the Revenue can enforce Bond and recover the duty without exercising the process of adjudication. Such provision is not available in the statute. In the identical facts and on the legal points, this issue has been considered with reference to the limitation particularly against 100% EOU units in the case of Emcure Pharmaceuticals 2014 (307) ELT 180 (T) which was affirmed by Hon ble Bombay high Court rejected in 2016 (342 ) ELT 172 (Bom.), the Tribunal held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 itself. Therefore, the respondent cannot be said to have withheld any information from the department. The respondents plea that they were entitled for the benefit of exemption under Notification 23/2003 under the belief that they were entitled for benefit of such Notification cannot be said to be a mis-declaration as held by the honble apex Court in Northern Plastics Ltd. vs. Collector of Customs Central Excise AIR 1998 SC 2371. If the department felt that the respondent was not entitled to such exemption, they should have issued the show cause notice within the period stipulated under Section 11A. Revenues reliance on the decision of the Tribunal in the case of Endress + Hauser Flowtec (I) Pvt. Ltd. (supra) does not come to their rescue for the reason that B-17 Bonds are executed not only by the 100% EoUs but also units in the DTA. If Section 11A is applicable in respect of units in DTA who have executed B-17 Bonds before the department, the same logic would apply in respect of 100% EoUs as well. Therefore, the argument that merely because the respondent has executed a B-17 Bond they would fall outside the purview of Section 11A is illogical and irrational. One cannot int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 11A and invocation of the extended period thereunder. The extended period could not have been invoked in the absence of the requisite ingredients and to be found in Clauses (a) to (e) of sub-section (4) of Section 11A of the Central Excise Act, 1944. This is clearly a finding of fact and reached in the backdrop of the assessee s peculiar case. We do not think that such findings raise any substantial question of law. The Tribunal s view cannot be said to be perverse. It is a possible view of the matter. The appeal is devoid of merits and is dismissed. Similarly in the case of Madhu Silica Pvt. Ltd, despite the 100% EOU executed B17 Bond, the demand was held time barred in a case where the same Notification No. 23/03-CE was involved. In the said judgment following order was passed: 4. Heard both sides and perused the case records. Following issues are mainly required to be addressed in these appeals:- (i) Whether a corrigendum issued after holding a personal hearing in the present proceedings is only a correction of arithmetic error in calculation or has changed the very basis of the original show cause notice dated 14.12.2014? (ii) Whether no time li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Serial No. 2 of the said Notification shall be substituted. However, in Para 2(d) of the corrigendum dated 18.6.2012 the words alongwith other duties at full tariff rate on DTA sale of their finished goods is also added. These words have added altogether new parameter by the investigation through the corrigendum dated 18.6.2012 which was not the subject matter of the original show cause notice dated 14.12.2011. Corrigendum dated 18.6.2012 issued suggesting duty calculations change by virtue of amending Notification No. 22/2006-CE dated 01.3.2006 and 10/2008-CE dated 01.03.2008 is permissible as it does not change the basis of the original show cause notice. But suggesting to change all other duties to be paid at full tariff rate on DTA sale of appellants various finished goods, in Para- 2(d) of corrigendum 18.6.2012, is a new point not coming out from the original show cause notice dated 14.12.2011. We are accordingly of the view that corrigendum dated 18.6.2012 is also changing the very basis of duty demand originally proposed in show cause notice dated 10.12.2011. It is thus not correct on the part of the Adjudicating authority, as held in Para 55 of OIO dated 08.1.2013, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in the case of Endress + Hauser Flowtec (I) Pvt. Ltd. (supra) does not come to their rescue for the reason that B-17 Bonds are executed not only by the 100% EOUs but also units in the DTA. If Section 11A is applicable in respect of units in DTA who have executed B-17 Bonds before the department, the same logic would apply in respect of 100% EOUs as well. Therefore, the argument that merely because the respondent has executed a B-17 Bond they would fall outside the purview of Section 11A is illogical and irrational. One cannot interpret the law in such a way so as to make the provisions of law redundant. 6.1 It is also observed from the language of Bond B-17 executed by main appellant on 30.6.2004, that the same is mainly with respect to inputs and machinery procured duty free. Rather a subsequent B-17 Bond executed on 17.12.2009 in Annexure-I to the Bond, gives the duty foregone and involved in the Bond. There is no mention of duty with respect to DTA clearances. Para 3 and 11 of the B-17 Bond dated 30.6.2004 talks of said goodsand to be paid within 10 days of a demand made by such officers. Opening Para of the Bond dated 30.6.2004 gives the description of goods as dutiab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in these proceedings it has to be decided whether extended period is invokable as per issue framed at Para 4(iii) above. Adjudicating authority has upheld invocation of extended period on the grounds that appellants have never disclosed to the department that supplier GHCL was taking deemed export benefit under Para 8.3(a) and (b) and that it was the responsibility of the main appellant to take sufficient precautions when availing an exemption notification as department can not presume availment of such benefits. It is observed from the statements of Director of the main appellant Ms. Neepa Mehta and Shri Darshak R. Shah that none of them ever stated that they were having knowledge that GHCL was availing the benefit of Para 8.3(a) and (b) of the FTP. It is only after being explained by the investigation that they stated that GHCL was availing the benefit of Para 8.3(a) and (b). However, there is a force in the arguments of the learned Advocate that none of the documents received by them from M/s. GHCL indicate anywhere that GHCL was availing the deemed export benefit under Para 8.3(a) and (b). It is seen from one such invoice No. 0004806 dated 21.5.2009 that following typed endor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were received under Para 8.3(a) and (b) as per endorsement made by GHCL on invoices. As already observed actual inspection of some of these invoices does not indicate that supplier availing deemed export benefit of paras 8.3(a) and (b) of FTP. Paras 19.1 and 19.2 of OIO dated 08.1.2013, contained in reply of the appellant to show cause notice are relevant and reproduced below:- 19.1 They further stated that much emphasis was laid by the Revenue on the invoices of M/s. GHCL, but even invoices of this raw material supplier also did not clearly show that they had claimed or availed deemed export benefits under paragraph 8.3 (a) (b) of the FTP for the goods sold and supplied to them. Since the Revenue had now raised the present dispute, they had closely examined the documents under which GHCL supplied materials to them and they found that only DFIA file number was written on their invoices, but there was no reference at all to para 8.3 (a) (b) of the FTP on the invoices or ARE-3s of M/s. GHCL also. They were however not aware that DFIA file number shown on the invoices of a raw material supplier would mean that they had availed deemed export benefits under paragraph 8.3 (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculation of other duties at tariff rates. As the corrigendum dated 18.6.2012 has been issued after a period of one year from the relevant dateand is accordingly held to be time barred. However, the original show cause notice is issued on 14.12.2011 and the period of demand is 06.7.2007 to April 2011, therefore, the entire period is not time barred. For this matter, the case will be required to be remanded back to the adjudicating authority for quantification after providing documentary evidence to the main appellant that supplies made by the GHCL to the main appellant were under Para 8.3(a) and (b) of the relevant FTP. Needless to say that Adjudicating authority will give an opportunity of personal hearing to the main appellant before deciding this limited issue in remand proceedings, in view of observations made in Para 8 and 8.1 above. 11. Except to the extent indicated in Para 10 above, appeals filed by the appellants are allowed. In the case of Jain Grani Marmo Pvt. Ltd (Supra), the demand against 100% EOU was held time barred on the ground that there is no suppression of fact and mis-declaration. The Hon ble Gujarat High Court in the case of CCE Vs. Meghmani Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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