Custom, Excise & Service Tax Tribunal
M/S Hanil Era Textiles Ltd vs Commissioner Of Central Excise, Raigad on 30 August, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. E/3370/05-Mum (Arising out of Order-in-Original No. 143/COMMR (AH)/05 dated 15th July 2005 dated passed by the Commissioner of Central Excise (Adj), Mumbai.) For approval and signature: Honble Shri M V Ravindran, Member (Judicial) Honble Shri C J Mathew, Member (Technical) ====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
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M/s Hanil Era Textiles Ltd
Appellant
Vs
Commissioner of Central Excise, Raigad
Respondent
Appearance:
None
for Appellant
Shri Ajay Kumar, Joint Commissioner (AR)
for Respondent
CORAM:
HONBLE SHRI M V RAVINDRAN, MEMBER (JUDICIAL)
HONBLE SHRI C J MATHEW, MEMBER (TECHNICAL)
Date of Hearing: 30.08.2016
Date of Decision: 30.08.2016
ORDER NO.
Per: C J Mathew:
Proceedings were initiated against appellant, M/s Hanil Era Textiles Ltd, a 100% Export Oriented Unit (EOU) issued with Letter of Permission (LoP) by the jurisdictional Development Commissioner in accordance with the Foreign Trade Policy (FTP) framed under the Foreign Trade (Development & Regulation) Act, 1992, for recovery of Rs 1,72,42,235 allegedly short-paid on clearances of yarn into the Domestic Tariff Area (DTA) during May 2003 to March 2004. Appellant contended before the adjudicating authority that the clearance of these goods were at the applicable rate of duty of Central Excise and hence there has been no short-payment.
2. The adjudicating authority did not agree with this contention as notification no. 8/97-CE dated 1st March 1997, substituted by notification no. 23/2003-CE dated 31st March 2003 (at serial no. 3), predicated the eligibility to clearance at the rates of central excise duty only upon such clearances as were manufactured from domestically procured raw materials and held the appellant to be ineligible owing to absence of any evidence to that effect.
3. It was held that an export oriented unit was required, under section 3 of Central Excise Act, 1994, to discharge duty on domestic clearances by payment of duty at a rate equivalent to that charged on like goods when imported into India. The adjudicating authority, however, took note of the exemption (in serial no 2) in notification no. 23/2003-CE dated 31st March 2003, which replaced notification no. 2/95-CE dated 4th January 1995, permitting clearance at half the duty to be so levied and, as the conditions stipulated therein had been complied with, allowed the benefit of that exemption. Duty liability was confirmed at Rs 43,10,130, with interest thereon, and penalty of Rs 43,10,139 was imposed under section 11AC of Central Excise Act, 1944 in order-in-original no. 143/COMMR (AH)/05 dated 15th July 2005 of Commissioner of Central Excise (Adj), Mumbai.
4. Before us, appellant claims that the inclusion of special additional duty (SAD) in the computed liability is not in accordance with the law, that the adjudicating authority erred in denying consideration of evidence of having used domestically procured raw materials for the manufacture, that multiple show cause notices had been issued for the same period, and that extended period not being liable to be invoked to penalty had been wrongly imposed.
5. None appeared for the appellant. Learned Authorized Representative reiterated the contents of the impugned order. Reliance has been placed by Revenue on the decision of the Honble Supreme Court in Nahar Industrial Enterprises Ltd v. Union of India [2004 (170) ELT 518 (SC)].
6. We have perused the contention of appellant that they have convincing proofs of domestic procurement of raw materials. We, however, do not feel that mere procurement of raw materials entitles them to eligibility to notification no. 23/2003-CE at serial no. 3 without it being put to use for such manufacture. No evidence has been submitted of the separate accountal and issue of raw materials in the manufacture of goods that were cleared domestically. This submission is not backed by any proof of procurement of all raw materials from domestic sources and, in the absence of such evidence, we cannot but concur with the original authority that the duties are liable as applicable to goods imported into India. We also concur with the original authority that the benefit of exemption to the extent of 50% of the aggregate duties must be extended as the condition in serial no. 2 of notification no. 23/2003-CE has been complied with.
7. On the issue of levy of special excise duty, we observe that there is no exemption granted in so far as this element of tax is concerned. Undoubtedly, this is a countervailing measure and is refunded to traders who are subject to sales tax upon sale of imported goods. The intent of the notification is to place the domestic procuring entity at par with supplier of imported goods. The levy of duty under section 3 of Central Excise Act, 1944 on clearances effected domestically includes all duties leviable under all the statutes relevant to imported goods and, hence, domestic area clearance cannot be excused from leviability. It may also be noted that the exemption to imported goods is administered though a refund mechanism with sanction accorded by customs authorities of place of import. A parallel provision does not exist for export oriented units whose domestic clearances are not within the jurisdiction of Customs Houses which administer the refund mechanism.
8. The appellant is not in a position to establish eligibility for clearance at the rates of duty applicable to local manufacture. The default taxing provision, i.e. section 3 of Central Excise Ac, 1944, was not unknown to the appellant. Appellant chose to pay duties under a notification for which they were not eligible. Such a failure is not attributable to lack of knowledge considering that appellant had obtained all the clearances from the Development Commissioner as is mandated in serial no.2 of table in notification no. 23/2003-CE which lays down condition for eligibility to duty concession of half of the aggregate duties otherwise leviable on imported goods. The availment of extended period of limitation and imposition of penalty under section 11AC of Central Excise Act, 1944 cannot be faulted.
9. For the above reasons, we find no reason to interfere with the impugned order and reject the appeal.
(Operative portion of the order pronounced in open Court) (M V Ravindran) (C J Mathew) Member (Judicial) Member (Technical) Sp E/3370/05 2