C.C.E. & S.T. -Ltu Mumbai, C.C. -Mumbai (port-import) Versus Lupin Ltd & LUPIN LTD Versus CGST C.E & C. C-BHOPAL
Central Excise
2019 (2) TMI 937 – CESTAT NEW DELHI – TMI
CESTAT NEW DELHI – AT
Dated:- 14-2-2019
Excise Appeal No.56083, 56084/2014-EX(DB), Customs Appeal No.54528-54529/2015 & Excise Appeal Nos.50792-50793/2018 with Misc. No.50327-50328/2018 – A/50261-50266/2019-EX[DB]
Central Excise
MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) And MR. BIJAY KUMAR, MEMBER (TECHNICAL)
Shri S.K. Bansal, DR for Department/Appellant.
Shri Bharat Raichandani, Advocate for the assessees.
ORDER
PER ANIL CHOUDHARY:
The brief facts involved in the present case for both units i.e. 'Prill' & 'Oral' is tabulated respectively as under –
2. The facts (Prill Unit), in brief, are thus:
Date
Summary
Event
19.08.2010
Filing of de-bonding application
The applicant made an application to Development Commissioner ('DC'), Indore, SEZ, Mumbai for de-bonding of its Prill Unit EOU.
31.
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e 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 confirmed the mode of payment proposed vide letter dated 11.02.2011.
04.03.2011
Payment of duty & request for NDC
The appellant submitted complete details of payment of duty on de-bonding along with other relevant documents to the DC-LTU and requested DC-LTU to issue No Dues Certificate ('NDC').
31.05.2011
NDC received
The DC-LTU issued NDC to exit from the EOU scheme.
23.06.2011
Final de-bonding order
The Development Commissioner issued final de-bonding order.
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DC-LTU objected mode of payment of duty
The DC-LTU, after a long gap of more than one year from the date of issuance of NDC, di
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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 excise duty, custom duty and cenvat credit.
This resulted in the present Departmental appeal to CESTAT.
06.04.2015
Application for re-credit
Pursuant to above order dated 03.09.2014, the appellant filed an application of re-credit of cenvat credit reversed during the course of investigation.
09.07.2015
Refund application
The appellant 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 to the appellant with respect to the abo
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peal 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 to Development Commissioner ('DC'), Indore, SEZ, Mumbai for de-bonding of its Oral Unit EOU and requested for extension of validity period of letter of permission and green card.
28.03.2011
Approval for exit from EOU scheme
The Development Commissioner extended validity period of letter of permission and green card. The Development Commissioner granted 'in-principle approval' for exit from EOU scheme.
01.04.2011
Intimation of effective date of de-bonding
The appellant applied to the Deputy Commissioner of Centr
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pto 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.
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DC-LTU objected mode of payment of duty
The Deputy Commissioner-LTU, long after the entire process was over, disputed the mode of payment of excise and customs duty by the appellant and directed the appellant to discharge its duty liability in cash. Further, the Deputy Commissioner-LTU also directed to reverse cenvat credit availed on CVD and SAD paid on raw material and capital goods (indigenous as well as importer).
February, 2013 to March, 2013
Payment of duty in cash and reversal of credit under protest
The appellant again discharged the above liability in cash along with int
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t.
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
Reply to deficiency notice
The Respondent replied to the above queries of the department and submitted various documents in support of the claim.
28.10.2015
Re-credit sanctioned
In the meantime, the Assistant Commissioner, LTU, Mumbai sanctioned the above re-credit claim of the respondent filed on 06.04.2015.
07.01.2016
SCN issued for refund application
The department issued the show cause notice calling upon the respondent to show a
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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, grounds of appeal in the Appeal Memorandum and submissions made by the respective parties.
APPEAL FILED BY THE REVENUE
7. We find that the Commissioner has passed a detailed and cogent order. The Commissioner has given finding on each and every point and decided the show cause notice judiciously.
8. The grounds of appeal do not dispute the factual position. The grounds of appeal are beyond the scope
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C)
(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 obtained advance authorization & EPCG License for duty free procurement of inputs and capital goods through advance license. M/s Lupin, after the cut off date procured the Advance authorizations and utilized the same for payment of import duty amounting to Rs. 75,34,044/- on raw material covered under Bill of Entry No.1 to 4 all dated 03.03.2011. Similarly, they also procured EPCG license a
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n 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 has been taken by the DGFT. There is no such proposal. The Revenue cannot go beyond the license and propose to deny benefit of exemption and demand duty. The Hon'ble Supreme Court in the case of Titan Medial Systems Private Limited V/s CC 2003 (15) ELT 254 (SC) held thus:
As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrep
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ensing 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 of facts can be alleged against the Respondent. The Respondent has paid the duties in respect of the stock as on cut-off date. The show cause notice merely disputes the mode of discharge of duty i.e. whether Excise duty on Customs duty ought to be paid. Hence, it cannot be said that the Respondent indulged in any collusion, willful misstatement or suppression of facts with intent to evade du
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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. The same have been accepted by the department. There is no dispute about this factual position. There is no material to suggest that the Respondent had made any deliberate mis-statement or suppression to defraud the Government of its due revenue. No evidence has been produced by the Revenue on record. There is no such whisper in the present appeal as well. Hence, there exists no circumstanc
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id 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 on cut-off date. This view is in line with the said notifications as well.
21. Second, the duty payable for clearance of goods from EOU to DTA unit is duty of Central Excise. Similarly, when the EOU converts to DTA the duty payable on finished goods and goods procured indigenously is central excise duty. This view has been taken by Larger Bench of this Tribunal in Vikram Ispat vs. CCE
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ty 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 at the time of de-bonding of EOU.
24. Fifth, the department itself, in grounds of appeal at Para 2.6(Prill) &Para 2.3 (Oral), has contended that on de-bonding the respondent (appellant therein) is liable to pay customs duty on imported goods and excise duty on the indigenously procured goods and finished goods. Therefore, on this count alone, we find that the entire proceedings go
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cise 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 satisfied:
(i) the goods imported or indigenously procured qualify as 'inputs' or capital goods' in terms of definition under Cenvat Credit Rules, 2004;
(ii) capital goods and inputs are received in the factory of the manufacturer; and
(iii) the capital goods and inputs are used in the factory of the manufacturer for manufacture of excisable goods or used for providing
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f 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 materials, packing materials and consumables. Hence, credit of SAD should also be extended to the respondent on all imported procurement and not only on capital goods.
Customs duty paid by debiting EPCG license and advance license is legal and proper
31. We find that the case of the department is that the customs duty paid, at the time of de-bonding, by the respond
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ty 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 license is correct and is in accordance with procedure provided in the FTP 2009-14.
33. Second, Para 6.18 of the FTP 2009-14 prescribes that the Development Commissioner may submit an EOU to exit from the EOU scheme by availing the benefit under EPCG Scheme subject to fulfilment of the positive NFEE criteria. Similarly, Notification No.52/2003-Cus also
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ave 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 identical set of facts, this Tribunal in Welspun Zucchi Textiles V/s CCE 2006 (204) ELT 401, 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 obtain
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icate by the Deputy Commissioner. Further, the respondent discharged duty of Rs. 62,91,409/- (Prill) & Rs. 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 an EOU till the date of final de-bonding order and is eligible to export finished goods without payment of duty under Bond B-17. This view has been taken by this Tribunal in Jubilant Life Sciences Limited Vs. CCE TS-182-Tribunal-2013-FTP, wherein the Tribunal held that no duty is payable on finished goods, lying in stock as on the date of de-bonding, provided the
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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 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. The order-in-appeal passed by the Commissioner (Appeals), on consequential refund, becomes a nullity. In any case, there are several infirmitie
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