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TMI Blog2003 (9) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the above said notifications and since the Department Commissioner VEPZ rejected their request to permit them to fulfil the export obligation part which was accounted against Advance Licence Scheme along with the export obligation for remaining period of five years, M/s. ALSA are liable to pay duty on the above said goods received duty free, as provided in Rule 196 of the Central Excise Rules, 1944. Though M/s, ALSA agreed to pay the duty amount involved in respect of the above goods, they have not come forward to pay up the amount. The total Central Excise Duty amount payable on the above said goods works out to Rs. 2,77,430/-. Since M/s. ALSA failed to account for the above said goods as having used for the purpose for which they were received duty free and availed of the exemption without satisfying the conditions attached to the notifications, the said goods are liable for confiscation under Rule 173Q(1)(b) of the Central Excise Rules, 1944. M/s. ALSA are also liable for penalty under Rule 173Q(1)(b) of the said rules. Thus, it is clear that M/s. ALSA had cleared the goods manufactured in their 100% EOU to the DTA without payment of duty and without raising any invoice an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory of the EOU and the notice under 210 Rule has been issued. Therefore, we refrain from determining any penalty under that rule. If the Exports had been made in contravention of the DEEC law, in as much as DEEC exports cannot be reckoned from an export from an EOU, then the DEEC availment by the appellant company should have been impugned by the Department and not the manufacturer and export from the EOU. From a question from the Bench, it could not be clarified whether the DEEC exports and fulfilment of export obligations under the Advance Licences have been impugned. The Department is free to take such action for the DEEC exports misdeclared, in the facts of this case, as available under law to them. In any case, for DEEC exports, made from Chennai, the jurisdiction of Commissioner of Central Excise and Customs, Visakhapatnam is not competent officer to invoke that jurisdiction by taking cognizance of the exports correctly or incorrectly made from Chennai. In view of our findings, this appeal is allowed with consequential relief, as per law. - S/Shri G.A. Brahma Deva, Member (J) and S.S. Sekhon, Member (T) [Order per : S.S. Sekhon, Member (T)]. - (a) M/s. ALSA Marine and Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Excise Rules, 1944, and without following the procedures as stipulated in Rule 100E ibid; (ii) failed to observe the conditions of Notfn. No. 13/81-Cus. dated 9-2-81 under which goods were imported duty free, in so far as they did not export out of India hundred percent or such other percentage, as may be fixed, of articles manufactured wholly or partly from the goods imported; (iii) failed to observe the conditions of Notfn. No. 123/81-C.E., dated 2-6-81, 57/94-C.E., dated 1-3-94 and 1/95-C.E., dated 4-1-95 under which indigenous goods were received without payment of central excise duty against CT-3 certificates, in so far as they failed to export out of India hundred percent or such other percentage, as may be fixed, of articles manufactured wholly or partly from such non duty paid goods; (iv) failed to observe conditions of the bond executed by them before the Assistant Commissioner of Central Excise and Customs, Visakhapatnam undertaking to fulfil the export obligations and conditions stipulated under the Import and Export Policy. (v) The 100% EOU of M/s. ALSA at Bhimli appeared to have imported different goods valued at Rs. 37,10,164.00 without payment of duty during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94, 1994-95 and 1995-96 was Rs. 4,25,49,371/-, Rs. 43,47,97,371/-. The total duty payable on the above said goods at the rate of 10% Adv. works out to Rs. 4,34,79,737.10. They also appeared to be liable for penalty under Rule 173Q(1) of the Central Excise Rules, 1944. (viii) Since it appeared that the 100% EOU of M/s. ALSA had cleared the abovesaid manufactured goods without payment of duty and without raising any invoice as stipulated under Rule 100D of the Central Excise Rules, 1944 and without following the procedures prescribed and since they appeared to have given false statement to the Development Commissioner, VEPZ, Visakhapatnam, in the returns filed to the effect that the said goods were exported in discharge of the export obligation on them and suppressed vital information that the said goods were exported in the name of their Head Office in discharge of the export obligation on the said Head Office against the Advance Licences under the DEEC Scheme taken by them, the extended period of limitation as provided in the proviso to Section 11A(1) of the Central Excise Act, 1944 appeared to be applicable for raising the demand of duty on the finished goods cleared. Since the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the above demands. 2.The Commissioner, after hearing the parties, found :- (a) It is admitted by M/s. ALSA that the goods in question, processed and packed in their 100% EOU at Bhimli, were allowed to be exported in the name of their Head Office in Chennai, a DEEC Advance Licence holder. It is also not disputed that M/s. ALSA Marine Harvests Ltd., Chennai had exported the above said goods under the DEEC Scheme, and discharged their export obligation under the DEEC Scheme to that extent. (b) There is clear distinction between units operating as Hundred percent Export Oriented Undertakings and units operating in the Domestic Tariff Area. The clear distinction between hundred percent EOU and units in DTA is further evident from paragraph 160 of Chapter IX of the HandBook of Procedures April, 1992 - March 1997. (c) M/s. ALSA Marine Harvests Ltd. Chennai, had procured Advance Licences under the Duty Exemption Entitlement Scheme from the licensing authorities and they were under legal obligation to export the specified quantity of goods and to bring in foreign exchange to the county. The 100% EOU of M/s. ALSA at Bhimli also, being a hundred percent EOU, are under legal oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., Chennai, does not help the 100% EOU of M/s. ALSA because the said exports were effected by the DTA unit of M/s. ALSA Marine , Harvests Ltd., Chennai in their name, as if the goods had originated from the DTA and accordingly they had claimed the export benefits due to such goods originated from the DTA. (g) It is clear that M/s. ALSA had during March 1994, 1994-95 and 1995-96 cleared frozen marine products processed and packed in their 100% EOU at Bhimli of a total value of Rs. 43,47,97,371/- to the DTA (to the Head Office of M/s. ALSA Marine Harvests Ltd., Chennai, a unit in the Domestic Tariff Area) without payment of duty. (h) As per Section 2 of the Central Excise Tariff Act, 1985, the rates at which duties or excise shall be levied under the Central Excise Act, 1944 are specified in the Schedule. The goods in question are chargeable to 'Nil' rate if duty under Heading 03.01 of the Schedule to the Central Excise Tariff Act, 1985. Since 'Nil' rate has to be considered as a rate of duty, the above products are subject to a duty of excise. Therefore, it is clear that shrimps and other marine products are excisable goods. In the Customs Tariff, shrimps and prawns fall under Head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed and packed in their 100% EOU using the imported goods. The Development Commissioner, VEPZ, Visakhapatnam also, vide Letter No. QPR(76)/VEPZ/96-97, dated 21-3-97 rejected the request made by M/s. ALSA to permit them to fulfil the export obligation part which was accounted against Advance Licence Scheme along with the export obligation for the remaining period of five years, instead of paying the duty amount of Rs. 22,08,935 foregone on the duty free imports made by them during the period from 1992-93 to 1995-96. They directed M/s. ALSA to pay the duty amounting to Rs. 22,08,935/- to the jurisdictional Assistant Commissioner of Customs immediately. Since, M/s. ALSA failed to fulfil the conditions of Notification No. 13/81-Cus., dated 9-2-81 and since the Development Commissioner, VEPZ had held that they had not fulfilled export obligation, they are liable to pay the duty on the above said imported goods cleared duty free. Though M/s. ALSA agreed to pay the customs duty payable on the above said goods, they did not come forward to pay up the amount. The total customs duty amount payable on the abovesaid imported goods works out to Rs. 27,53,915/-. As per Section 111(o) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, M/s. ALSA are liable to pay duty on the above said goods received duty free, as provided in Rule 196 of the Central Excise Rules, 1944. Though M/s, ALSA agreed to pay the duty amount involved in respect of the above goods, they have not come forward to pay up the amount. The total Central Excise Duty amount payable on the above said goods works out to Rs. 2,77,430/-. (l) Since M/s. ALSA failed to account for the above said goods as having used for the purpose for which they were received duty free and availed of the exemption without satisfying the conditions attached to the notifications, the said goods are liable for confiscation under Rule 173Q(1)(b) of the Central Excise Rules, 1944. M/s. ALSA are also liable for penalty under Rule 173Q(1)(b) of the said rules. (m) From the above discussions it is clear that M/s. ALSA had cleared the goods manufactured in their 100% EOU to the DTA without payment of duty and without raising any invoice and without following the stipulated procedure for such clearance. They have also suppressed the fact of clearance of the said goods in the DTA without payment of duty from the knowledge of the department. Chapter VA of the Central Excise R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also ordered the confiscation of goods under Section 110 (o) and Rule 173Q(1)(b) and offered a redemption fine. 3.After hearing both sides and considering the material on record, it is found :- (a) Rule 173A(2) of Chapter VIIA reads as under :- "Nothing in this Chapter shall apply to a manufacturer or producer who has been allowed to discharge his duty liability in accordance with the provisions contained in Sec. C-I, E-III, E-VI OR E-IX of Chapter V or to whom the provisions of Chapter V-A apply." Therefore, penalty and confiscation as levied and ordered by the ld. Commissioner under the provisions of Rule 173Q cannot be upheld since Chapter VA of the Central Excise Rules, 1944 apply to removal from an EOU unit. Therefore, penalties and confiscations arrived at under Rule 173Q(1) are required to be set aside. (b) Notification No. 125/84-C.E. dated 26-5-84 exempts goods manufactured in India in a EOU from whole of the duties levied thereon under Sec. 3 of the Central Excise Act with the following proviso : "Provided that the exemption contained in this notification shall not apply to such, goods if allowed to be sold in India." In this view of the matter, no Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not preparing appropriate documents of removing the goods for export could be imposed only under Rule 210 of the Central Excise Rules, which are applicable to this EOU. That rule prescribes maximum penalty of Rs. 1000/-. There is no clear cut finding, as to on what document, if any, the goods were removed from the factory of the EOU and the notice under 210 Rule has been issued. Therefore, we refrain from determining any penalty under that rule. (e) If the Exports had been made in contravention of the DEEC law, in as much as DEEC exports cannot be reckoned from an export from an EOU, then the DEEC availment by the appellant company should have been impugned by the Department and not the manufacturer and export from the EOU. (f) From a question from the Bench, it could not be clarified whether the DEEC exports and fulfilment of export obligations under the Advance Licences have been impugned. The Department is free to take such action for the DEEC exports misdeclared, in the facts of this case, as available under law to them. In any case, for DEEC exports, made from Chennai, the jurisdiction of Commissioner of Central Excise and Customs, Visakhapatnam is not competent officer to i ..... 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