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TMI Blog2023 (6) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of M/S DIVIS LABORATORIS LTD HYDERABAD VERSUS COMMISSIONER OF CENTRAL EXCISE, AND CUSTOMS VISAKHAPATNAM [ 2019 (2) TMI 80 - CESTAT HYDERABAD] it was held that if the raw materials/ inputs cleared pertain to procuring the inputs by getting the benefit of Notification No. 52/2003-CUS, the EOU is required to pay the duty only by way of cash and Cenvat credit cannot be utilized since the inputs were imported by claiming Customs Duty exemption. In the present case, the Appellant is required to pay the duty only by way of cash debit (PLA debit). They are not eligible to utilize Cenvat credit for such clearances - since the Appellant has procured the goods indigenously, the clearances can be made by debiting Cenvat credit account. Time Limitation - HELD THAT:- The Appellants have kept the Department informed about their clearances by seeking permission for clearance of imported/ indigenous raw materials/ inputs. Further, they have paid the requisite duty by way of Cenvat debit. It is not the case of the Department that the Appellant has evaded the payment of duty by not paying the same either by way of cash payment (PLA debit) or by way of Cenvat debit. In both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earance of raw materials/ inputs to DTA units, they have been obtaining permission from their jurisdictional Central Excise officials and they are being clearing under proper invoices giving details of duty payment. Such transactions are also recorded in the ER2 Returns. The Department issued Show Cause Notice for the period April, 2005 to September, 2005 involving the extended period and for the normal period October, 2009 to March, 2010 on the ground that when such duty free inputs are cleared from EOU to DTA, the Duty is required to be discharged by way of cash payment, by way of debit in the PLA Account whereas the Appellants have utilized the Cenvat credit which is not legal and proper. After due process, the demands were confirmed. Being aggrieved by the impugned Orders, the Appellants are before the Tribunal. 2. The Department has filed Appeal E/30017/2019 in respect of the dropped demand of Rs. 64,86,091/- on the same issue where periodical proceedings were taken up. The period involved is November, 2015 to June, 2017. In this case, the issue is identical to the Appeals filed by the Appellant. The Commissioner (Appeals) has relied on the case law of the Appellant i.e., M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to any suppression. There is no dispute that the duty involved has been paid and also reflected in the Cenvat availed column in the ER2 Return. Only where the entire duty is not paid nor reflected anywhere, the Department can take a stand that there is some suppression involved. Further he submits that the SCN did not invoke provisions of B17 Bond. Therefore, the Department cannot take a stand that the SCN can be issued at any later date without any concern for the limitation on account of time bar. He further submits that the demand is revenue neutral. The amounts have been paid by way of Cenvat credit. If the Department s contention is held as correct, then the Appellant should have paid the same by way of PLA debit. In both the cases, it is not disputed that the Appellant has blocked the money. Therefore, the Appellant does not stand to gain anything by making the payment by way of Cenvat credit. Therefore, even on this count the Department s allegation that there is suppression with an intent to evade does not legally sustain. Further as the cited case laws including the case law in their own case i.e., Matrix Laboratories Ltd vs CCE, Hyderabad (cited supra) has held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent on the DTA clearances. The show-cause notices were issued on this premise. It is settled law that what is paid by a 100% EOU on DTA clearances is duty of excise (for the period of dispute in this case) which is calculated as aggregate of duties of customs which would have been leviable if the same goods had been imported at the relevant time. In other words, the duties of customs constitute just a measure of the duty of excise to be paid on the DTA clearance. This legal position was settled by this Tribunal and appellate courts long ago. No overriding decision of any competent court to the contra has been cited before me. 6. The respondent paid duty of excise on the imported inputs cleared as such to their sister concern in DTA. It was paid under appropriate account head. The respondent was entitled to pay such duty either wholly from PLA or partly from PLA and partly from CENVAT account. There is no law denying this right to a 100% EOU. The appeals filed by the department are ill-conceived and the same are rejected. [Emphasis supplied] 8. In the case of Hetero Labs (cited supra), the Tribunal has held as under: 7. I find that the first appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty of excise which was calculated in terms of the proviso to Section 3(1) of the Central Excise Act. There is no dispute regarding the amount of duty so paid. According to the appellant, it was customs duty which was paid by the respondent on the DTA clearances. The show-cause notices were issued on this premise. It is settled law that what is paid by a 100% EOU on DTA clearances is duty of excise (for the period of dispute in this case) which is calculated as aggregate of duties of customs which would have been leviable if the same goods had been imported at the relevant time. In other words, the duties of customs constitute just a measure of the duty of excise to be paid on the DTA clearance. This legal position was settled by this Tribunal and appellate courts long ago. No overriding decision of any competent court to the contra has been cited before me. Respectfully following the same, I find that these Department's appeals are liable to be rejected. 8. Reliance by the Departmental representative on the Division Bench decision in Stay Order dt. 28/12/2011 will not carry the case of the Revenue any further inasmuch as it is settled law that the Stay Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are removed as such; or (d) An amount under sub-rule (2) of Rule 16 of Central Excise Rules, 2002; or (e) Service tax on any output service; It can be seen from the relevant portions of the CENVAT credit Rules clearly indicate that the CENVAT credit cannot be utilised for payment of customs duty. 7. In the case in hand, Revenue authorities are correct in demanding the amount of customs duty, in cash, on the raw materials consumed for manufacture of finished goods which are cleared to DTA by claiming exemption. In our view, no provisions in the CENVAT Credit Rules permit the appellant herein to use the balance for discharging the customs duty on the imported goods 8. At the same time, learned counsel was correct in stating that if all the amounts which are due from the appellants if paid in cash, the CENVAT credit which has been debited should be restored. We do find strong force in these contentions. We direct that the appellant should discharge all the customs duty in cash, calculated by the Revenue authorities, on the imported goods consumed in manufacturing of final products cleared to DTA claiming exemption, on that occurrence of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further in their own case in Matrix Laboratories Ltd vs CCE, Hyderabad (cited supra) and CC CE, Hyderabad-IV vs Hetero Labs (cited supra), the Tribunal has held that the clearances can be made by utilizing the Cenvat credit. Therefore, we can assume that the Appellant could be holding bonafide belief that they are eligible to utilize Cenvat credit for only clearances. Further as there are Tribunal decisions in their favour during the period under dispute, the issue would be that of interpretation only. Taking all these facts into account, we feel that the Department cannot allege any suppression on part of the Appellant. Therefore, we hold that the demand pertaining to the extended period is liable to be set aside in all the Appeals, wherever the demand has been confirmed for the extended period. We allow the Appeal to this extent. 14. The Appellant is required to pay the duty involved for the normal period. Since the duty was already paid by way of Cenvat credit, there being no revenue loss to the Department, interest and penalties are set aside. 15. Since the Appellant is making good the payment by way of cash, the Appellant would be entitled to get the relief for the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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