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TMI Blog2024 (6) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1962 invoking extended period is not sustainable. The above issue for consideration is no more open to debate as the issue has been discussed at length and was decided by the Co-ordinate Bench of the Tribunal in the appellant s own case [ 2023 (6) TMI 458 - CESTAT HYDERABAD ] where it was held that ' 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.' Thus, in terms of the Order of the Tribunal in the appellant s very own case having determined that the demand normal period alone is sustainable and that too in respect of duty involved on imported inputs for which the amount of customs duty foregone is required to be paid in cash and not to debit entry in PLA ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs Act, 1962. Besides the above, the adjudicating authority imposed penalty on the appellant for an amount equal to duty under Section 114A ibid by issue of an Order-in-Original dated 21.02.2019. Feeling aggrieved with the order the original authority, the appellant had preferred an appeal before the Commissioner (Appeals) who had upheld the Order-in-Original dated 21.02.2019 and rejected the appeal filed by the appellant. Being aggrieved with the impugned order passed by the Commissioner (Appeals), the appellant had preferred this appeal before the Tribunal. 3.1 Learned Consultant has submitted that the appellant has rightly paid the entire duty foregone in respect of inputs used in the finished goods on which no duty was payable. Subsequent to the payment of duty, the appellant s records were audited by the Department twice but no objection was raised in respect of the payment made through Cenvat credit. Further, in the case of appellant himself, such payment of duty through the Cenvat credit was allowed in the past by the Tribunal. Hence he pleaded that on the basis of such order of this Tribunal, this case should also be considered and the appeal filed by them shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Park Complex under the export-oriented scheme (hereinafter referred to as the unit); or (iii) manufacture and development of electronics hardware or electronics hardware and software in an integrated manner for export by an Electronic Hardware Technology Park (EHTP) unit or a unit in Electronic Hardware Technology Park Complex under the export-oriented scheme (hereinafter referred to as the unit); or .. xx xx xx xx 3. Notwithstanding anything contained in this notification, the exemption from the whole of duty of Customs leviable thereon under First Schedule to the Customs Tariff Act, 1975 (51 of 1975), shall not apply to inputs which on importation into India or procurement, are used for the purpose of manufacture of finished goods [other than falling under Fourth Schedule of Central Excise Act, 1944 (1 of 1944)] or services and such finished goods and services, (including byproducts, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods) are supplied in Domestic Tariff Area in accordance with the Foreign Trade Policy, on payment of applicable Goods and Services Tax leviable thereon, or are in stock at the time of exit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein Customs Duty concessions are available to them. Similarly, in respect of indigenously procured raw materials, consumables etc., they are availing the exemption provided under Notification No. 22/2003-CE dt.31.03.2003. While the imported and indigenous goods bought under these Notifications are required to be used in the manufacture and clearance of their exported finished goods, in some cases, they have also cleared such imports of the raw materials to their DTA units on which they have paid appropriate duty while clearing the same. For such clearance 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 ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds raised by the adjudicating authority has recorded the following findings:- 5.1. The lower authority held that the appellant cleared the subject goods in violation of Rule 17 of CER, 2002, whereas, the duty demanded in the show cause notice is for violation of Rule 3(4) of CCR, 2004. I find that there is no allegation in the show cause notice regarding violation of Rule 17 of CER, 2002. Therefore, I find that the lower authority has traversed beyond the show cause notice. The first appellate authority has recorded a very clear finding on this point and are inconsonance with the law. Firstly, I find that the show cause notice which has been issued to the respondents are demanding the duty from them under the provisions of Section 11A(1) / Section 11A(4) of the Central Excise Act, 1944 which would mean that there are demand of Central Excise duty; the said provisions of the Central Excise Act having been invoked in the show-cause notice, the utilisation of the CENVAT credit lying in balance cannot be called in question, as provisions of Rule 3(4) clearly indicate that the CENVAT credit balance can be used for discharge of any duty of excise on any final product or an amount equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation in form of a Final Order. On a specific query from the Bench, it was informed that appeal No. E/1389/2011 is still pending for final disposal. It was also informed by the party that the Final Order of the Tribunal dt. 23/12/2011 has also not been upset by any higher judicial forum. On perusal of the final order dt. 23/12/2011, I find the Bench of the Tribunal in the case of Matrix Laboratories Ltd. [Final order dt. 23/12/2011] was dealing with an identical situation as is in this case and held in favour of the assessee therein, and the same needs to be followed by me as there is no contrary view brought to my notice. [Emphasis supplied] 9. As per the above two decisions, it has been held that the EOU Assessee is eligible to utilize Cenvat credit when they clear inputs/ raw materials to DTA unit. However, the Hyderabad Tribunal in the case of Divis Laboratories Ltd (cited supra) has held as under: 4. On a careful consideration of the submissions made by both sides, we find that the issue is that whether appellant herein can utilise balance in CENVAT credit account for discharge of customs duty like basic customs duty, additional customs duty (CVD) and special customs duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason to interfere in the orders of the lower authorities except for recredit as ordered above. Accordingly, the appeals are disposed of. [Emphasis supplied] 10. From this Final Order it emerges 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. 11. The present demand is required to be bifurcated under the following headings: (i) Duty involved in respect of imported inputs cleared The amount involved pertains to Customs Duty foregone. The Show Cause Notice was issued seeking to recover the Customs Duty under Section 28 of the Customs Act, 1962. Hence the case law of Hetero Labs cited above will be applicable. (ii) Duty involved in indigenous goods cleared to DTA The amount involved pertains to Excise Duty foregone initially and Show Cause Notice has been issued to recover Excise Duty in terms of Section 11A of the Central Excise Act, 1944. Hence Matrix Laboratories Ltd (cited supra) would be applicable. 12. Therefore, we hold as under: a) In res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of all the Appeals. (ii) The confirmed demands for the normal period are to be bifurcated with separate amounts on account of imported items cleared and indigenous items cleared. (iii) In respect of input items cleared (ii) above, the Appellants are required to pay the amount in question by way of cash (PLA/ GAR-7 Challans) payment, when imported items are involved. (iv) In respect of indigenous items (ii) above, where indigenous items are involved and where the Appellants have utilized the Cenvat credit, no demand sustains. (v) For the cash payments done in respect of (iii) above, the Appellants would be entitled to get appropriate relief, by approaching the relevant forum. 7.1 In view of the foregoing discussions and analysis, and in terms of the Order of the Tribunal in the appellant s very own case having determined that the demand normal period alone is sustainable and that too in respect of duty involved on imported inputs for which the amount of customs duty foregone is required to be paid in cash and not to debit entry in PLA account. Accordingly, the impugned order dated 19.11.2019 in upholding the original order demanding customs duty under Section 28(4) ibid and im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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