2019 (2) TMI 937 – CESTAT NEW DELHI – TMI – Debonding of unit – scope of SCN – Held that:- 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.
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Time limitation – it has been held by the Commissioner (Appeals) that the appeal is time barred – Held that:- 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 limitation. Once the entire demand is time barred and it has been accepted by the Department, the question on merits would become purely academic. On this count
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se 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 to DTA.
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Availment of cenvat credit of the excise duty paid on indigenous procured goods, SAD paid on capital goods imported and CVD and SAD paid on imported raw material – Held that:- The Revenue contends that the respondent is not eligible to avail cenvat credit on the inputs and consumables as the cenvat credit of the same is available at the time when the inputs and consumables are procured in the factory of manufacture of final product. This contention is without any legal basis.
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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 capi
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hence, the same cannot be allowed to discharge Customs duties. This contention is without any legal basis – In identical set of facts, this Tribunal in Welspun Zucchi Textiles V/s CCE [2006 (8) TMI 55 – CESTAT, MUMBAI], wherein the issue was utilization of EPCG license for payment of duties on second hand machinery, at the time of de-bonding of EOU, which was duly allowed by the Development Commissioner. In the said judgment, ‘In principle’ approval for de-bonding was obtained on June 29, 1999, and the EPCG license was obtained on August 5, 1999, and benefit under the EPCG scheme was granted even though the EPCG license was obtained after acquiring the in-principle approval for de-bonding by Development Commissioner.
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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 respond
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ral excise duty is payable at intermediate stage. No goods are manufactured or produced at that stage. Appendix 14-I-L of the FTP Handbook of Procedures Vol. 1 outlines the exit from the EOU Scheme. The said appendix lays down the applicable customs and excise duties payable by the unit on imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods. It does not provide for payment of duties on WIP. Obviously and logically so. Therefore, no duties of customs are payable on WIP at the time of debonding.
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Once the appeal filed by the Department is rejected, the action proposed by the Revenue on the refund application is negated. Hence, the payment of duties, in cash, subsequently, after the objection taken by the department, becomes refundable to the Respondent.
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Appeal dismissed – decided against Revenue. – Excise Appeal No.56083, 56084/2014-EX(DB), Customs Appeal No.54528-54529/2015 & Excise Appeal Nos.50792-50793/2018 with Misc. No
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issued DGFT 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 Confirmation of mode of payment DC-LTU conf
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once again discharged the above liability in cash along with interest and reversed cenvat credit taken on the original duty payment. The said payment and reversal were made under protest . 01.11.2013 SCN issued on the basis of above investigation The department issued show cause notice to the appellant, alleging that the payment method adopted by the appellant for payment of duties at the time of de-bonding is incorrect and the cenvat credit availed on CVD and SAD is inadmissible. 20.12.2013 RUD received The appellant received the relied upon documents of the above show cause notice. 15.01.2014 Reply filed The appellant filed a detailed reply to the above show cause notice and refuted all the allegations contained therein. 07.04.2014 Additional submissions The appellant filed additional submissions in response to the above show cause notice. 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 exci
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use notice calling upon the appellant to show as to why their refund claim should not be rejected. The said show cause notice once again alleged that the mode of payment of duties by the appellant at the time of de-bonding was incorrect. 05.05.2016 Reply filed The appellant filed a detailed reply to the above show cause notice. 11.05.2017 O-I-O partly rejected the claim of refund The order-in-original issued by the Deputy Commissioner, LTU, Mumbai partly rejected the refund claim of the appellant. Appeal to CCE(A) The appellant filed an appeal against the above order, in as much as it was against the appellant, before the Commissioner (Appeals) 30.11.2017 O-I-A upheld the O-I-O The impugned order-in-appeal passed by the Commissioner (Appeals) upheld the order-in-original dated 11.05.2017. Present appeal Hence, the present appeal, by assessee. 3. The facts (Oral Unit), in brief, are thus: Date Summary Event 10.03.2011 Filing of de-bonding application The Respondent made an application
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eme 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 The Development Commissioner extended validity period of letter of permission upto 30.04.2012, and the permission for in-principle de-bonding was also extended by one month upto 27.04.2012. 17.04.2012 Request for NDC The Respondent once again requested the DC-LTU to issue the NDC. 26.04.2012 NDC received The Deputy Commissioner-LTU issued NDC to exit from the EOU scheme. 15.06.2012 Final de-bonding order The Development Commissioner issued final de-bonding order. _______ DC-LTU objected mode of payment of duty The Deputy Commissioner-LTU, long after the entire process was over,
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above show cause notice. 22.01.2014 Reply filed The appellant filed a detailed reply to the above show cause notice and refuted all the allegations contained therein 09.04.2014 Additional submissions The appellant filed additional submissions in response to the above show cause notice. 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. 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
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e appellant, before the Commissioner (Appeals) 30.11.2017 O-I-A upheld the O-I-O The impugned order-in-appeal came to be passed by the Commissioner (Appeals) rejecting the appeal filed by the Respondent – Present appeal Hence, the present appeal filed by the assessee against rejection of refund claim. 4. The details of the appeals filed in the present case are tabulated as under – S.No. Appeal filed by whom Appeal filed against Order Number along with date Unit 1. Revenue Order-in-Original 186/Commr/WLH/LTU-M/CX/2014 dated 03.09.2014 Prill 188/Commr/WLH/LTU-M/CX/2014 dated 03.09.2014 Oral 2. Assessee Order-in-Appeal BHO-EXCUS-001-APP-510-17-18 dated 30.11.2017 Prill BHO-EXCUS-001-APP-505-17-18 dated 30.11.2017 Oral 5. Personal hearing was held on 14.08.2018, Mr. Bharat Raichandani, Ld. Advocate, appeared on behalf of the appellant/respondent (M/s Lupin) and reiterated the submission made in their appeal memorandum. 6. We have carefully gone through the facts of the case on record, grou
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epartment seems to have accepted the order on limitation. Once the entire demand is time barred and it has been accepted by the Department, the question on merits would become purely academic. On this count alone, the present appeals filed by the department are liable to be dismissed. The above view has been taken in the following cases: (i) CCE V/s Balakrishna Industries 2006 (206) ELT325 (SC) (ii) CCE V/s Echjay Forging Private Limited 2015 (319) ELT 127 10. We find that during the course of hearing, however, the Ld. Authorized Representative for the Revenue relied upon one ground of appeal to submit that the finding on limitation has been challenged by the Revenue. The same reads thus: 3.5) Para 6.18(e) provides that between No dues certificate issued by the Customs and Central Excise Authorities and final debonding order by the Development commissioner, unit shall not be entitled to claim any exemption for procurement of capital goods or inputs. It is seen that Lupin Oral has obtai
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t any merit for the reasons as follows: 12. First, the said ground is not a ground on limitation. The said ground does not challenge the finding of the Commissioner, reproduced above, on limitation. It is not even prayed that the demand is not time barred. The said ground of appeal does not urge that the dropping of the demand by not invoking the extended period of limitation under proviso to section 11A of the Central Excise Act 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 h
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be noted that the licensing authority having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. 15. The above view has been re-iterated by the Hon ble Bombay High Court in Autolite (India) Limited V/s Union of India 2003 (157) ELT 13 (Bom). 16. Fourth, in any case, there is no error in grant of the said license by the DGFT. There was no misrepresentation on facts. The basic grievance of the Revenue is utilization of the advance license for payment of duties. There is no bar against the same under the Policy. Para 6.8(e) is in a different context and cannot be relied upon. 17. Last, in any event, in the facts of the instant case, no suppression
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epartment. 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
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partment 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. We find that the above case is devoid of any merit for the reasons stated herein below- 20. First, the Respondent is an EOU. It availed benefit of Notification No. 52/2003-Cus and Notification No. 22/2003-CX. Accordingly, imported goods and indigenously procured goods without payment of custom duty and excise duty respectively. Therefore, when a unit gives up its EOU status, the said benefit availed by the unit (ie, whatever duty foregone) should be given back. Hence, the EOU exiting from the EOU scheme shall be liable to pay customs duty and excise duty on imported goods and indigenously procured goods respectively lying in the stock as
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resent 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 be paid on imported and indigenous goods in stock. Therefore, if the contention of the department is accepted, the provisions of FTP would become redundant. The provisions shows that the legislature never intended to impose only customs duty on the goods lying in stock a
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for discharging excise duty on removal of goods from EOU to DTA. This view has been consistently taken by this Tribunal in the following cases: (i) CCE V/s Gangeshwar Shipping Mills 2016 (336) ELT 696 (i) Tecumseh Products India P. Ltd. vs. CCE – 2015-TIOL-3066-CESTAT-BANG (ii) CCE vs. Sequent Scientific Ltd. – 2018-TIOL-1475-CESTAT-MUM Availment of cenvat credit of the excise duty paid on indigenous procured goods, SAD paid on capital goods imported and CVD and SAD paid on imported raw material 27. The Revenue contends that the respondent is not eligible to avail cenvat credit on the inputs and consumables as the cenvat credit of the same is available at the time when the inputs and consumables are procured in the factory of manufacture of final product. This contention is without any legal basis. 28. We find that as per Rule 3 of the Cenvat Credit Rules, 2004 allows cenvat credit of the duty paid on goods procured by the Respondent is available provided the following conditions are
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e 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 only to the extent of CVD portion paid on imported capital goods and does not extend credit of SAD portion of customs duty on such goods. Further, such cenvat credit of CVD has been allowed only for capital goods and not for raw materials, raw material content in work in progress, packing materials and consumables. This shows the dual stand taken by the Revenue itself. It is well settled that the department cannot blow hot and cold at the same time. The law does not permit blowing the bugle at both ends. Such arbitrary allowance of credit is grossly unjustified as, in terms of the Credit Rules, 2004, cenvat credit of SAD is available to a manufacturer of goods for not only the capital goods but also for other imports such as raw materia
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PCG and advance licenses were procured prior to issuance of No Dues Certificate . The Respondent achieved positive NFEE and submitted certified statement of duty liability on the exit stock on March 31, 2011 which was duly accepted by DC-LTU. In the meanwhile, the Respondent obtained No Objection for utilizing EPCG License towards payment of Customs duty on imported capital goods from Development Commissioner on August 03, 2011, and thereafter, the DFGT granted EPCG license to the Respondent. As admitted in the show cause notice, the Respondent presented such EPCG licenses towards discharge of duty on imported capital goods; 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 l
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ns, wherein such EPCG licenses should be procured. Apart this, neither the provisions in FTP nor Notification No.52/2003-Cus or Notification No.22/2003-CE prohibit utilization of EPCG license obtained pursuant to receipt of in-principal approval for de-bonding from Development Commissioner. When the provisions granting the exemption and also the FTP have liberalized the entire process, validily obtained EPCG license, cannot be denied on the ground that the same were obtained after the cut-off date. Denial of the benefit of payment of duty by debiting EPCG license is not justified. 34. Third, the EPCG and advance licenses are issued by Director General of Foreign Trade ( DGFT ) subject to the terms of conditions mentioned in FTP and schemes made thereunder. The customs or excise department has no jurisdiction to question the legality of issuance of EPCG and advance license. Once the said licenses are procured legally, the same can be utilized to discharge custom duty liability. 35. In i
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ondent shall not be eligible for the benefits available to an EOU. There is no basis for this argument. 38. We find that the respondent did not discharge duty on finished goods amounting to ₹ 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
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payable on WIP/semi-finished goods 40. It is well settled that central excise duty is payable on excisable goods as defined under section 2(e) of the Central Excise Act. No central excise duty is payable at intermediate stage. No goods are manufactured or produced at that stage. Appendix 14-I-L of the FTP Handbook of Procedures Vol. 1 outlines the exit from the EOU Scheme. The said appendix lays down the applicable customs and excise duties payable by the unit on imported and indigenous capital goods, raw materials, components, consumables, spares and finished goods. It does not provide for payment of duties on WIP. Obviously and logically so. Therefore, no duties of customs are payable on WIP at the time of debonding. This view has been taken by this Tribunal in Tirumala Seung Han Textiles Limited V/s CCE 2009 (237) ELT 145. 41. In light of the above findings, the department appeals are dismissed. APPEAL BY THE ASSESSEE 42. We find that once the appeal filed by the Department is rejec
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