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TMI Blog2025 (3) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... he parameters of the exemption clause or exemption notification.' The basic of the EOU scheme is for promotion of the exports. From para 6.8 of the Foreign Trade Policy reproduced above it is quite evident that the entire production of the EOU is to be exported and the DTA sales are permitted in certain specific conditions subject to the restrictions and conditions imposed. The Exemption N/N. 23/2003-CE which is in respect of the DTA sales made by an EOU needs to be considered in an strict manner in accordance with the scheme. The appellant soon after starting their EOU started clearance of the scrap/ goods in DTA. The intentions of the appellant by making such huge clearances of scrap and goods within a period of less than a year from the date of setting of EOU and starting export production and clearances is itself indicative of the ill intentions of the appellant. For the reason that the appellant has deposited the entire amount of duty along with the interest during the investigation and prior to issuance of Show Cause notice the proceedings in respect of the amounts so deposited could not have been initiated against the appellant and the same should have been closed as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount as demanded vide para above. (iii) I Impose penalty of ₹ 3,05,25,795.00 (Rupees Three crore Five lakhs Twenty five thousand Seven hundred & Ninety five only) upon M/s Chaudhry Hammer Works Ltd. ( 100% EOU), Khasra No. 34,35,36,37 & 38, Village Acheja, Post Dujana, Gautam Budh Nagar under provisions of Section 11AC of Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002, and FTP. (iv) I impose penalty amounting to ₹50,00,000/-( Rupees Fifty lacs only) on Shri Mukul Chaudhry, M.D.of M/s Chaudhry Hammer Works Ltd., ( 100% EOU), Khasra No. 34,35,36,37 & 38, Village Acheja, Post Dujana, Gautam Budh Nagar under Rule 26 of Central Excise Rules, 2002 read with FTP, and Central Excise Act; 1944 (v) I impose penalty amounting to ₹ 10,00,000/- ( Rupees Ten lacs only) on Shri Gayatri Nath Srivastava, V.P. (F&A) of M/s Chaudhry Hammer Works Ltd., (100% EOU), Khasra No. 34,35,36,37 & 38, Village Acheja, Post Dujana, Gautam Budh Nagar under Rule 26 of Central Excise Rules, 2002 read with. FTP, and Central Excise Act; 1944. (vi) I impose penalty amounting to ₹5,00,000/(Rupees Five lacs only) on Shri Manoj Singhal, Commercial Manager of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty against DTA clearances correctly. 2.4 Further investigations and enquiries were made in the matter. Statements of Appellant 2, 3 and 4 who were hold in senior management positions with the appellant were recorded. Thus it was observed that that appellant short paid the duty as detailed in table below: S No Description Amount in Rs 1 Period 2008-09 & 2009-10 2 Amount Due as per proviso to Section 3 (1) 47746677 3 Amount Paid -17220882 4 Short Paid 30525795 2.6 On being pointed out the above, the appellant deposited duty and interest as detailed below and informed the department and informed the jurisdictional authorities: Amounts in Rs S No Letter Dated Duties Interest Total 1 29.01.2010 86,09,335 118328 87,27,663 2 17/18.03.10 2,07,55,090 1065780 2,18,20,870 4 28/4/10 4,64,250 20997 4,85,247 5 29/4/10 6,97,120 233173 9,30,293 Total 3,05,25,795 14,38,278 3,19,64,073 2.6 A Show Cause Notice dated 10.05.2010 was issued to appellants asking them to show cause as to why- (i) Demand and recovery of ₹3,05,25,795.00 (Rupees Three crore Five lakhs Twenty five thousand Seven hundred & Ninety five only) against short payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details. Reliance for interpreting the word "similar" is placed on the following decisions: Axiom Cordages Ltd. [2021 (%) TMI 665 Cestat Mumbai] DCM Hyundai Ltd. [2023 (4) TMI 211-CESTAT Chennai)] NFE at the time of clearance of finished goods was positive. Prior permission for DTA sale was not required by the Appellant. Exemption from BCD & SAD has been rightly availed by the Appellants on sale of scrap. Third time cess is not payable. Reliance is placed on the following decisions: Sarla Performance Fibers Ltd. [2010 (253) ELT 203 9T-Ahd)] Meghmani Dyes & intermediates [2014 (11) TMI 615 -SC Meneta Automotive Components Private Limited [2023 (8) TMI 789 Cestat Chandigarh] Extended period is not invokable, interst could not have been demanded and penalties could not have been imposed. Penalty under Rule 26 could not have been imposed upon the employees and essential ingredients are not satisfied. 3.3 Authorized representative reiterated the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 Impugned order records the findings as follows: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise, Delhi-1" in which it was held "when LOP cancelled by Development Commissioner unit can be debonded. Cancellation of private bonded warehousing license wrong when LOP not expired. Adjudication order holding failure to achieve NFE not sustainable when issue not referred to Development Commissioner. 6.10 With regards to the allegation regarding Permission for DTA sale before sale: (para2 (iv) (c) of SCN), they submitted that their unit being a 'Status Holder' EOU does not require permission for DTA Sale as per Hand Book of Procedure Volume 1 and only prior intimation needed to be given which they had done. 6.11 They also added that no SAD was imposable as they under sub-section (5) of section 3 of The Customs Tariff Act, 1975 because they were availing benefit of Notification No. 23/2003 dated 31.03.03. As per Sr. No. 1 of aforesaid notification, if condition no. 1 is fulfilled then SAD is not required to be paid. Condition No. 1 is "if the goods being cleared into the Domestic Tariff Area not exempt by the state government from payment of Sales Tax or Value Added Tax". Thus, if the goods are vatable in respective state then no Special Additional Duty is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment Commissioner. Hence it was in violation of the provision of the FTP 6.14.1 I further find that there is an allegation against them that the goods cleared by them in DTA were not similar to the goods cleared for export. In this regard, with their written submissions dated 18.4.2011, they have enclosed a certificate from DEBA Engineers & Consultants a duly certified chartered engineers, who have justified the similarity of goods on the ground that both type of goods namely sold in DTA and exported were manufactured by same process i.e. forging and hence were similar and that variation in description, dimension, chemical composition, mechanical properties etc do not change the similarity aspect of the goods. Regarding similarity of the goods I find that CBEC, vide Circular No. 7/2006-Cus dated 13.01.2006, as amended by Circular No. 12/2008 dated 24.07.2008, gave the guidelines that "Similar goods" means goods which are although not alike in all respects, have like characteristic and like component materials which enable them to perform same functions and to be commercially inter changeable with the goods which have been exported or expected to be exported having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to DTA sales, there were basic 3 conditions- (a) The goods sold in DTA should be similar to the goods which are exported; (b) The unit should have achieved positive NFE; (c) DTA sale entitlement/ permission from Development Commissioner should be available to the unit beforehand for undertaking DTA clearances; 6.14.3 I further find that unless all these three conditions were satisfied, a 100% EOU unit was not entitled to sell their goods in DTA at concessional rate of duty in terms of Notfn. 23/2003 during the period under dispute. Hence when the first condition of similarity of goods was not satisfied, even if there could be positive NFE and even if the permission from the Development Commissioner might not be required for a status holder exporter, a 100% EOU was not entitled to avail the benefit of the said notification. I thus find that the clearances made by the party in DTA during the Fin. Years 2008-09 and 209-2010 were in contravention of the provisions of Foreign Trade Policy as well as Notfn. no. 23/2003 dated 1.3.2003 and as such they were not eligible to avail the benefit of concessional rate of duty for DTA sales during the said period. 6.15 Coming to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd only when the wrong availment of the benefit of Notfn. 23/2003 was pointed out after the same came to the notice of the Department. Hence it cannot be said that the payment which has not been claimed under protest is voluntary. In fact, the stand of the party still remains that they were entitled for Notfn. 23/2003 and as the clearances in DTA exceeded over 50% of FOB value, the amount of duty attributable to said clearances was paid without protest. However, the fact cannot be negated by them that the clearances of goods , not being similar, were in contravention of the provisions of FTP as well as Notfn. 23/2003 and were made knowingly and willingly without keeping in mind the provisions of Foreign Trade Policy. Therefore, on this ground I find that they are not entitled for any relief against the charges made and established against them. 6.16 Regarding their stand that extended period was not invokable as there was no suppression of facts and mis-declaration, I find that not only the clearances were, made in contravention of the provisions of notfn. 23/2003 and FTP but also they deliberately misdeclared even at the stage of adjudication about the similarity of goods. Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification, and referred to in the corresponding entry in column (5) of the said Table, from so much of the duty of excise leviable thereon under section 3 of the Central Excise Act as specified in the corresponding entry in column (4) of the said Table. TABLE Sr. No Chapter or heading No. or sub-heading No. Description of Goods Amount of duty Conditions 1 2 3 4 5 3 Any Chapter All goods other than those referred to in 5, 5A, 6, 7 and 7A of this Table In excess of amount equal to aggregate of duties of excise leviable under Section 3 of the Central Excise Act or under any other law for the time being in force on like goods produced or manufactured in India other than in an export oriented undertaking, if sold in India. 3 Condition no. 3 of the Notification states that:- "If- (i) the goods are produced or manufactured wholly from the raw materials produced or manufactured in India,. (ii) the goods are cleared into Domestic Tariff Area in accordance with sub-paragraphs (a), (d), (e) and (g) of Paragraph 6.8 of the Foreign Trade Policy ; and (iii) such goods, if manufactured and cleared by the unit other than export oriented undertaking are not wholly exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled. 4.7 The basic of the EOU scheme is for promotion of the exports. From para 6.8 of the Foreign Trade Policy reproduced above it is quite evident that the entire production of the EOU is to be exported and the DTA sales are permitted in certain specific conditions subject to the restrictions and conditions imposed. The Exemption Notification 23/2003-CE which is in respect of the DTA sales made by an EOU needs to be considered in an strict manner in accordance with the scheme. The appellant soon after starting their EOU started clearance of the scrap/ goods in DTA. The intentions of the appellant by making such huge clearances of scrap and goods within a period of less than a year from the date of setting of EOU and starting export production and clearances is itself indicative of the ill intentions of the appellant. In the case of Hindustan Granites [2007 (211) E.L.T. 3 (S.C.)] hon'ble Supreme Court has observed as follows: "20. We find no merit in the challenge to the impugned circular/notification for the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order records the reason for arriving at the findings. Hon'ble Supreme Court has in case of Saheli Leasing & Industries Ltd [2010 (253) E.L.T. 705 (S.C.)] observed as follows: "6. We, therefore, before proceeding to decide the matter on merits, once again would like to reiterate few guidelines for the Courts, while writing orders and judgments to follow the same. 7. These guidelines are only illustrative in nature, not exhaustive and can further be elaborated looking to the need and requirement of a given case :- (a) It should always be kept in mind that nothing should be written in the judgment/order, which may not be germane to the facts of the case; It should have a co-relation with the applicable law and facts. The ratio decidendi should be clearly spelt out from the judgment/order. (b) After preparing the draft, it is necessary to go through the same to find out, if anything, essential to be mentioned, has escaped discussion. (c) The ultimate finished judgment/order should have sustained chronology, regard being had to the concept that it has readable, continued interest and one does not feel like parting or leaving it in the midway. To elaborate, it should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant would suffer unnecessary hardship if we remand the matter back to original authority after nearly 15 years for re-adjudication after obtaining necessary concurrence from the Development Commissioner we are not inclined to take that course of action. All litigations must end and not be kept alive for some procedural inadequacies. Even the Board Circular relied upon do not bar initiation of proceedings but only restricts the adjudication of the same without concurrence from the concerned Development Commissioner. While making this observation we also note that the appellant have themselves opted out of the EOU scheme within three years (instead of 10 years) from the date of commencement of their operations as EOU as per the permission granted by the Development Commissioner and have got their unit de-bonded as per the provisions of policy. Further the NOC for de-bonding has been issued only after taking into account these amounts deposited by the appellant, and the unit would have been de-bonded only after taking the note of the NOC issued. As the appellant had already opted out of the scheme of EOU we reject the submissions made by the appellant to this effect. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s specific requirement conforming to the drawing and design having different mechanical properties and they are not similar. He admitted that he was responsible for the overall functioning of the unit and as an MD all the responsibilities and final decisions were taken by him. He also admitted that with respect to EOU clearances, Shri Manoj Singhal and Shri Gayatri Nath Srivastava, Vice President was responsible for duty payments and other procedures pertaining to EOU. I, therefore, find that Shri Mukul Chaudhry, Shri Gayatri Nath Srivastava and Shri Manoj Singhal were fully aware of the violations committed by the party & were actively involved in transporting, depositing, keeping, concealing, selling & purchase of excisable goods which they knew or had reason to believe were liable to confiscation under the Central Excise Act; 1944. As such I find that they have rendered themselves liable for penalty under rule 26 of the Central Excise Rules, 2002. From the above it is evident that penalty has been imposed upon these appellants only on the basis of the statement of Appellant 2 without recording any act of omission or commission committed by the appellant 2, 3 and 4 leading to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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