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TMI Blog2018 (12) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... red and Twenty Four only) under the proviso to Section 11-A of the Central Excise Act, 1944 and pass orders that the amount of ₹ 3,13,470/- already paid to be appropriated against the demand. (ii) I confirm an interest at appropriate rate, on the amount of duty ₹ 11,09,624/- (Rs. Eleven Lakhs Nine Thousand Six Hundred and Twenty Four only) under the provisions of Section 11-AB of the Central Excise Act, 1944 and; (iii) I impose penalty of ₹ 11,09,624/- (Rs. Eleven Lakhs Nine Thousand Six Hundred and Twenty Four only) under the provisions of Section 11-AC of the Central Excise Act, 1944. This order is issued without prejudice to any other action that might be taken against the assessee under any provisions of Central Excise Act/ Rule or any other Law for time being in force. Modifying the above order Commissioner (Appeal) held The order in original is modified to the extent of setting aside the penalty. The demand of ₹ 11,09,624/- along with interest payable thereon is however confirmed. 2.1 Appellants are 100% Export Oriented Unit manufacturing Cotton Yarn. During the period 9.07.2004 to 07.02.2005, they cleared their final pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. 3.3 For the revenue learned Authorized Representative reiterated the grounds taken by the Commissioner (Appeal) for upholding the demand. He specifically pointed out that proviso to Section 5A(1), unambiguously states exemption notification issue under the said sub section shall not be applicable in respect of the DTA clearances by an EOU, unless the notification specifically provided for the same. Since the notification under consideration do not provides that exemption under said notification shall be available to the EOU, appellant have contravened the provisions of law, by clearing the goods without payment of duty to DTA. 4.1 On merits it is admitted that during the relevant period appellants have cleared the goods without payment of duty claiming exemption under the notification No 30/2004-CE. The EOU status of the unit at the relevant time also is admitted. 4.2 For proper appreciation of the controversy it is relevant to take note of the following provisions of Central Excise Act, 1944 Section 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. - (1) There shall be levied and col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any place in India. Explanation. - In this proviso, free trade zone , special economic zone and hundred per cent export-oriented undertaking shall have the same meanings as in Explanation 2 to sub-section (1) of section 3. 4.3 From plane reading of the said provisions of the Central Excise Act, 1944, it is quite evident that in respect of the clearances made by the EOU, in Domestic Tariff Area, the duty is not levied and collected as prescribed by the 1 st or 2 nd Schedule to the Central Excise Tariff Act, 1985, but is collected as an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and the value for determination of such duty is not the value as determined under Section 4 of the Central Excise Act but is the value determined under the provisions of Customs Act, 1962. 4.4 From the proviso to Section 5A(1), it is very clear that any exemption notification issued in terms of the said section 5A(1) shall not be applicable, in respect of the clearances made by the EOU u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 975 (T-Del)]. Just quoting few excerpts from the last case to substantiate. 2. In the present cases, dispute has arisen as to what is the rate at which additional duty of customs (CVD) is to be levied on the goods cleared by the appellant's EOU to the Domestic Tariff Area. The appellants contended before the lower authorities that rate of duty applicable would be the effective rate of duty as fixed under exemption notification and not tariff rates of duty. The lower authorities held to the contrary, based on proviso to Section 5A of the Central Excise Act. This finding is challenged in the present appeals. 3. The appellants contend that it is well settled that additional duty of Customs (CVD) is to be levied at effective rates and not at Tariff Rates. They rely on the decision of the Hon'ble Gujarat High Court in the case of Varsha Exports and Others v. UOI and others - 2000 (40) RLT 9 (Guj) and letter F. No. 305/113/94-FTT, dated 19th February, 1998 of the Central Board of Excise and Customs. 3. We observe that the issue raised before the Hon'ble Gujarat High Court also was the effect of the same proviso to Section 5A on the clearance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or mis-declaring any information cannot arise as in the ER-2 itself the appellants have declared that they had availed exemption under notification No 30/2004-CE dated 09.07.2004. The penalty therefore is totally uncalled for and is set aside. 5.2 However even while arguing the matter learned advocate had chosen not to put forth the correct and complete facts, in relation to the demand. The relevant paras of the decision of the Commissioner (Appeal) are reproduced below: 7. The demand relates to the period 09.07.2004 to 07.02.2005 during which period the appellants were functioning as 100% EOU. The final debonding for the unit was issued by the Development Commissioner, SEEPZ, Mumbai on 08.02.2006. There is no dispute therefore that the provisions of law applicable to the 100% EOU were applicable to the appellant s at the relevant time. In terms of the provisions of Section 5A any exemption issue under Section 5A(1) was not applicable to a 100% EOU unless specifically provided in such a notification under notification No 30/2004-CE dated 09.07.04 issued under Section 5A(1). However this notification did not contain any provisions regarding its applicability to 10% EOUs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into by the appellant. As per the condition No. 6, the installation has to be completed within a period of 6 months from the date of completion of import or within such extended period as the Assistant Commissioner may allow. As such, it is seen that the installation can be done even beyond the period of limitation. The said condition is admittedly relatable to the end use and that is the reason why the importers are required to enter a bond and give a bank guarantee. The demand stands confirmed in terms of bonds by the appellant and cannot be held as barred by limitation. Similarly tribunal in the case of Vikram Enterprises vs Commissioner of Customs, Kandla {2008 (226) ELT 437 (T-Ahmd) has held that 5. There is nothing on record to show, much less any allegation, that it is the appellants who had prepared forged re-warehousing certificate. On the contrary, the investigations revealed that the consignee, a 100% EOU, was indulging in preparation of forged and fake re-warehousing certificate, in which case, the appellant cannot be doubted or penalized for placing the same before the authority. The Board's circular would definitely be applicable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undertaking given appellants are guilty of contumacious conduct and could not plead innocence. Counsel for appellant had while arguing the case ignore to make bench aware of the fact in respect of undertaking given and the bank guarantee. The entire case is not for creating fresh demands but for the recovery of admitted duty liability. 5.5 Since the duty liability was admitted by the appellants themselves as early in 2006, and they undertook to pay it themselves then, they should have honoured the undertaking given by them. In terms of the undertaking given the demand made cannot be held to be time barred. 6.0 Thus we do not find any merit in the appeal filed by the Appellants and dismiss the same. (Pronounced in court on __.10.2018) (Archana Wadhwa) Member (Judicial) (Sanjiv Srivastava) Member (Technical) Per Mrs. Archana Wadhwa: 7.0 I have gone through the order proposed by learned Brother, but with due respect to him, I have different views on the issue. 8.0 As regards the merits of the case, I find that both the sides have relied upon the precedent decisions of the Tribunal, some of which are in favour of the assessee. If the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating that wherever assessee gives an undertaking to pay the differential duty, if any, the same would lead the availability of longer period to the Revenue. In fact in many cases, at the time of search and seizure or otherwise, the assesses are made to deposit amounts, during the period of investigation itself. Such deposits made during investigations have been held to be refundable to the assessee, on the success of their litigations before the higher forums. The giving of an undertaking by an appellant can be reasonably compared to deposits of amounts during the investigations and cannot be held to be a criteria justifying invocation of longer period. First of all the liability against the assessee is required to be adjudged by initiation of proceedings, falling within the arena of law and it is only thereafter the undertakings or bank guarantees given by the assessee have to be considered in accordance with the finality of the proceedings. If the demands stand confirmed, then only the bank guarantees can be encashed and such confirmation of demands has to be within the four corners of the act. In the absence of any criteria that giving of bank guarantee or undertaking during i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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