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TMI Blog2019 (2) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... re of duty payable at the time of de-bonding - Held that:- even on merits, there is no case made out by the department in the instant appeal. The only case made out by the department in the show cause notice dated 01.11.2013 was that the nature of duty payable on the goods, which were procured indigenously, cleared by EOU to DTA is customs duty and not central excise duty. The show cause notice alleged that the goods cleared by EOU to DTA are to be treated as imported goods as EOU cannot be considered as located in India - the case id thus devoid of any merit. Discharge of excise duty liability by utilization of cenvat credit - Held that:- Revenue is of the view that the payment of central excise duty by the respondent at the time of de-bonding by debiting cenvat credit is incorrect. There is no legal basis for this view - as per Rule 17 of the Central Excise Rules, 2002 provides that in case where goods are removed from EOU to DTA, such removal shall be made under invoice and the duty leviable on such goods may be paid by utilizing the available cenvat credit or in cash. Thus, an EOU is permitted to utilize cenvat credit for discharging excise duty on removal of goods from EOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment Commissioner. Duty foregone on finished goods and raw materials exported pursuant to cut-off date - Held that:- The Revenue contends that the Respondent is liable to pay customs duty on the finished goods exported and raw material re-exported after the cut-off date as the respondent shall not be eligible for the benefits available to an EOU. There is no basis for this argument - the respondent cannot be placed in an indeterminate state in the intervening period till the NDC or final de-bonding order is obtained. Therefore, the respondent unit continues to remain an EOU till the date of final de-bonding order and is eligible to export finished goods without payment of duty under Bond B-17 - Even otherwise, assuming whilst denying, that the respondent is liable to discharge excise duty and customs duty in respect of the finished goods and raw materials, lying in exit stock, it would be a case of revenue neutrality as the respondent would be entitled to refund of the duty so paid. Hence, the entire exercise is purely academic and having no revenue implications. Liability of duty on WIP/semi-finished goods - Held that:- It is well settled that central excise duty is pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued Advance License to the appellant for discharging custom duty on imported raw material at the time of de-bonding. 01.10.2010 Intimation of stock to the department The appellant submitted self-certified stock statement of raw material, capital goods, consumables, work-in-progress ( WIP ) and finished goods lying in stock as on cut-off date 11.11.2010; 23.11.2010; 29.11.2010 Advance License issued DGFT issued Advance License to the appellant for discharging custom duty on imported raw material at the time of de-bonding. 23.12.2010 Completion of stock verification The DC-LTU intimated that the stock verification has been completed by central excise officers and the appellant was directed to discharge central excise and custom duty at applicable rates. 11.02.2011 Computation of Liability The appellant submitted the computation of liability to the DC-LTU and requested to confirm the proposed mode of payment of duties. 22.02.2011 Confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.09.2014 O-I-O dropped SCN The order-in-original issued by the Commissioner, CX ST, LTU, Mumbai dropped the entire demand of central excise duty, custom duty and cenvat credit. This resulted in the present Departmental appeal to CESTAT. 06.04.2015 Application for re-credit Pursuant to above order dated 03.09.2014, the appellant filed an application of re-credit of cenvat credit reversed during the course of investigation. 09.07.2015 Refund application The appellant also filed a refund claim of the duty interest paid under protest during the course of investigation. 06.08.2015 Deficiency notice by department The department issued deficiency letter to the appellant with respect to the above refund claim. 20.10.2015 Reply to deficiency notice The appellant replied to the above queries of the department and submitted various documents to prove its claim. 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( DC-LTU ) for de-bonding the Oral Unit EOU w.e.f. 01.04.2011 21.07.2011 Completion of stock verification The Deputy Commissioner-LTU intimated that the stock verification has been completed by central excise officers and the appellant was directed to discharge central excise and custom duty at applicable rates. 03.08.2011 Issuance of NOC The Development Commissioner issued a NOC for exit from EOU scheme as well as conversion into the EPCG scheme. 08.09.2011 EPCG scheme DGFT granted authorization to the Respondent under EPCG scheme. 02.03.2012 Details of payment of duty The respondent submitted complete details of payment of duty on de-bonding along with other relevant documents to the Deputy Commissioner-LTU. 16.03.2012 Request to issue NDC The appellant requested Deputy Commissioner-LTU to issue No Dues Certificate ( NDC ). 04.04.2012 Extension of in-principle de-bonding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O-I-O dropped SCN The order-in-original issued by the Commissioner, CX ST, LTU, Mumbai dropped the entire demand of central excise duty, custom duty and cenvat credit. Hence, the present appeals by the Department 06.04.2015 Application for re-credit Pursuant to above order dated 03.09.2014, the Respondent herein filed an application of re-credit of cenvat credit reversed during the course of investigation. 09.07.2015 Refund application The Respondent also filed a refund claim of the duty interest paid under protest during the course of investigation. 06.08.2015 Deficiency notice by department The department issued deficiency letter with respect to the above refund claim. 20.10.2015 Reply to deficiency notice The Respondent replied to the above queries of the department and submitted various documents in support of the claim. 28.10.2015 Re-credit sanctioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission made in their appeal memorandum. 6. We have carefully gone through the facts of the case on record, grounds of appeal in the Appeal Memorandum and submissions made by the respective parties. APPEAL FILED BY THE REVENUE 7. We find that the Commissioner has passed a detailed and cogent order. The Commissioner has given finding on each and every point and decided the show cause notice judiciously. 8. The grounds of appeal do not dispute the factual position. The grounds of appeal are beyond the scope of the show cause notice. The grounds of appeal are without any merit. Hence, the appeals filed by the Revenue are liable to be rejected and consequential refund should be allowed to the Respondent. Finding on limitation 9. We find that it has been held by the Commissioner (Appeals) that the appeal is time barred. The said finding is a finding of fact. The said finding has not been challenged by the department. In other words, the demand has been set aside by the Commissioner on merits as well as limitation. However, in the instant appeals, the challenge is only on the merits of the case. The department seems to have accepted the order on limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or section 28 of the Customs Act is not correct. Hence, the reliance placed on the said ground is incorrect. 13. Second , in any event, the said ground of appeal is beyond the entire proceedings. The same is being raised for the first time during hearing before this Tribunal. This is clearly impermissible. The Revenue cannot make out a new case at this stage 14. Third , in any event, if the allegation that the advance license was obtained fraudulently is correct, then the Licensing authority (DGFT) would have taken action against the Respondent. No such action has been taken by the DGFT. There is no such proposal. The Revenue cannot go beyond the license and propose to deny benefit of exemption and demand duty. The Hon ble Supreme Court in the case of Titan Medial Systems Private Limited V/s CC 2003 (15) ELT 254 (SC) held thus: As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement, for issuance of a licence, that an applicant set out the quantity or value of the indigenous components which would be us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the department. Hence, the Respondent proceeded on the same basis. Moreover, all the relevant facts have been appropriately disclosed to the Department vide various letters and periodical returns. The Respondent communicated their intention for de-bonding from EOU vide letter dated March 9, 2011. Before commencing the de-bonding of the Oral EOU, the Respondent had obtained final de-bonding orders of Pril EOU. At the time of de-bonding of the Pril EOU, the Respondent discharged the applicable duties. As the unit had submitted their letter dated 11.02.2011 showing the mode of payments, department was already aware of the duty positions adopted by the Respondent. Further, pursuant to discharge of the applicable duties, the Respondent intimated the Customs and Excise authorities regarding the mode and methodology of computation and payment of applicable duties on goods lying in exit stock in these units, vide letter dated March 2, 2012 and the appellant/assessee also submitted various documents. The same have been accepted by the department. There is no dispute about this factual position. There is no material to suggest that the Respondent had made any deliberate mis-statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of duty on clearance of finished goods produced or manufactured within an EOU. The Larger Bench has, inter alia, held that clearance of goods by an EOU to any place in India is not import as defined under section 2(23) of the Customs Act, 1962. 22. Third , the taxable event contemplated under the Customs Act for the purpose of levy of customs duty is bringing goods into the territorial borders of India from place outside India. However, in the present case EOU is situated in the territory of India. The goods in dispute are procured by the respondent from a DTA unit located in the territory of India. Therefore, at all points in time, the goods remain in India itself. Hence, on de-bonding, there is no question of goods being said to have been imported into India and demand of custom duty on such goods is without any authority of law. 23. Fourth , Para 6.18 of Foreign Trade Policy ( FTP ) 2009-14 provides for exit of EOU from EOU scheme on condition of payment of excise and customs duties. Further, Appendix 14-I-L of FTP 2009-14 prescribes guidelines for de-bonding of an EOU. Clause (a) of the said appendix provides that applicable customs and excise duties would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uts or capital goods in terms of definition under Cenvat Credit Rules, 2004; (ii) capital goods and inputs are received in the factory of the manufacturer; and (iii) the capital goods and inputs are used in the factory of the manufacturer for manufacture of excisable goods or used for providing any output service. 29. We find that in the instant case, inputs and capital goods fall within the definition of input and capital goods as defined under Cenvat Credit Rules, 2004. This fact is not under dispute. The said inputs and capital goods were received in the factory of manufacturer and the same have been used in the manufacture of final products (excisable goods). This fact is also not under dispute. Furthermore, the Respondent has issued invoice under Rule 11 of the Central Excise Rules, 2002 while making payment of duty on such indigenous procurements. Hence, it is evident that the Respondent has fulfilled all the conditions of Rule 3 of the Cenvat Credit Rules, 2004 for availing credit of duty paid on such inputs and capital goods. 30. In fact, the department also accepts this legal position. In respect of imported procurements, department allows cenvat credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, the same was rejected on the sole ground that these licenses were obtained pursuant to the cut-off date. These facts have been ignored by the department in their show cause notice as well as appeals filed by them. Hence, the entire case of the department is frivolous and based on incorrect facts. Thus, the payment of customs duty through EPCG and advance license is correct and is in accordance with procedure provided in the FTP 2009-14. 33. Second , Para 6.18 of the FTP 2009-14 prescribes that the Development Commissioner may submit an EOU to exit from the EOU scheme by availing the benefit under EPCG Scheme subject to fulfilment of the positive NFEE criteria. Similarly, Notification No.52/2003-Cus also provides for utilization of EPCG License for discharging Customs duty on de-bonding of capital goods, subject to fulfilment of positive NFEE criteria by such EOU (Refer Para 4 thereof). Similarly, provisions for utilization of EPCG License for discharge of Excise duty on de-bonding of capital goods is also provided under Notification No.22/2003-CE (Refer Para 8 thereof). A perusal the same, clearly shows that an EOU which has fulfilled the positive NFEE criteria shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 58,27,344/- (Prill) Rs.10,90,669/- (Oral), lying in exit stock, which were exported out of India under Bond B-17, before the issuance of No Due Certificate by the Deputy Commissioner. Further, the respondent discharged duty of ₹ 62,91,409/- (Prill) ₹ 18,67,092/- (Oral) on the balance finished goods lying in stock at the time of payment of duty by debiting in their cenvat credit. In terms of note to Appendix 14-I-L of the HBP V1 which provides that a 100% EOU continues to be treated as EOU till the date of final exit order and such view is also expressed in various judicial precedents. The respondent cannot be placed in an indeterminate state in the intervening period till the NDC or final de-bonding order is obtained. Therefore, the respondent unit continues to remain an EOU till the date of final de-bonding order and is eligible to export finished goods without payment of duty under Bond B-17. This view has been taken by this Tribunal in Jubilant Life Sciences Limited Vs. CCE TS-182-Tribunal-2013-FTP, wherein the Tribunal held that no duty is payable on finished goods, lying in stock as on the date of de-bonding, provided there was no removal of goods into DTA f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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