Whether a 100% EOU clearing the goods in DTA to its own unit required to pay SAD?

PJ/CASE LAW/2014-15/2494

Case:- M/s STI INDUSTRIES Vs COMMISSIONER OF CENTRAL EXCISE, DAMAN AND VICE VERSA

Citation:-2014-TIOL-2611-CESTAT-AHM

Brief Facts:- These two appeals has arisen out of the Order in Appeal No. SRP /86/DMN/21314 dt.05.06.2013. The Appeal No.E /13080/2013 has been filed by the Commissioner, Vapi ,whereas the Appeal No.E /13087/2013 has been filed by M/s STI Industries, Vapi.
The relevant facts in brief that arises for consideration are that M/s STI Industries is a 100% Export oriented unit engaged in the manufacture of Electrical Machinery & parts thereof falling under chapter heading No. 85, 72, 74 & 76 of Central Excise Tariff Act, 1985. M/s STI were issued show cause notice dt.02.12.2011 alleging that during audit of the unit it was found that while clearing the goods in DTA to its own unit under stock transfer during the period Sept. 2009 to May 2011, M/s STI Industries has not paid any sales tax nor special additional duty. The Audit party took an objection to non-payment of SAD on the ground that clearance made to their sister concern would fall under the category of "exempted from payment of sales tax" hence they are liable to pay SAD. It was also contended that M/s STI has made less payment of CVD and therefore liable to pay such non paid SAD and less paid CVD. Consequentially a demand of 28 ,29,756/- of SAD and of Rs.4,98,217/- of CVD was made against M/s STI Industries under proviso to Section 11A by invoking extended period of limitation. It was also proposed to demand interest under Section 11AB and to impose penalty under Section 11AC of the Central Excise Act, 1944.
Show Cause Notice, dt.02.12.2011 was adjudicated vide Order in Original dt.27.12.2012 wherein the demand of SAD and CVD were confirmed along with interest. Also equivalent amount of penalty under section 11AC were imposed. M/s STI filed appeal before the Commissioner (Appeals) who vide order in appeal dt.05.06.2013 dropped the demand pertaining to SAD. However the demand of CVD was confirmed along with interest and penalty.
The revenue has filed appeal against the setting aside of demand of SAD whereas M/s STI has filed appeal against differential demand confirmed on account of CVD.
Appellant contentions:-The Ld. Counsel appearing for M/s STI submits that the issue of levy of SAD on goods supplied to the own DTA Unit has been decided in favour of the assessee in following judgments and hence demand of SAD is not sustainable:
(i) Micro Inks Vs CCE Daman 2014 (303) ELT 99 (TriAhmd)
(ii) In RE: G.E. India Industrial Pvt.Ltd . 2014 (304) ELT 452 (A.A.R.)
(iii) VVF Ltd Vs CCE Belapur 2012 (281) ELT 585 (TriMum)
(iv) Kumar Arch Tech Pvt.Ltd . Vs CCE JaipurII 2013 (290) ELT 372 (Tri LB)

As regard demand of differential demand of CVD, he submits that the demands were confirmed only on the basis of annexure of computation of demand to SCN and no reason for raising such demand was appearing either in the SCN or the Order passed by the adjudicating authority. He submits that the Appellate Authority has upheld demand only on the basis of such computation of demand appearing as annexure to the SCN, therefore the demand is not sustainable since the demand has no basis/ground. It is also his submission that even the quantification of demand was not made correctly.
The Ld. Counsel also draws our attention to the fact that since the goods were cleared to their sister concern on invoices to whom the credit of such SAD and CVD is available, the whole issue is revenue neutral and therefore there cannot be any demand raised against them by invoking extended period of limitation. Ld. Counsel also submits that since there is no deliberate act of nonpayment of duty and the fact of alleged non payment of SAD and less payment of CVD has come to the knowledge during audit from their own invoices, therefore it cannot be said that they had any malafide intention and hence the demands are time barred. He therefore prays that the demand be set aside and penalties be waived. He also relies upon following judgments in support of his contention:

(i) CCE Surat II Vs Gujarat Glass Pvt. Ltd 2013 (290) ELT 538 (Guj.)
(ii) CCE Raipur Vs Prakash Industries Ltd 2013 (290) ELT 693 (Tri Del)
(iii) Mohd . Yakub Mulla Vs CCE Mumbai III 2001 (137) ELT 1174 (Tri Mum)
(iv) Saral Industries Vs UoI 2005 (184) ELT 361 (Guj.)
(v) Collr. C.E . Vs Chemphar Drugs & Liniments 1989 (40) ELT 276 (S.C.)
(vi) Padmini Products Vs Collr. C.E . 1989 (43) ELT 195 (S.C.)
(vii) Essen Multipack Ltd Vs CCE Rajkot 2012 (280) ELT 518 (Tri-Ahmd)
(viii) CCE Nagpur Vs Ballarpur Industries Ltd 2007 (215) ELT 489 (S.C.)
(ix) CC Mumbai Vs Toyo Engineering India Ltd 2006 (201) ELT 513 (S.C.)

Respondent Contentions:- The Ld. AR submits that since the goods are exempted from payment of sales tax, hence the SAD should be paid by M/s STI . He also supports the demand of differential CVD.

Reasoning of Judgment:- Heard both sides and perused the records.

We find that the issue of demand of SAD on the goods cleared by 100% EOU to their own DTA Unit, is decided in favour of the assessee by this Bench in the case of M/s MICRO INKS Vs CCE, DAMAN 2013 (303) ELT 99 (TRI AMD) wherein the demands were set aside. In Tribunal’s considered view, the ratio of the decision of this Bench in the case of Micro Inks (supra) squarely settles the law in so far as this point. We are of the view that the demand of SAD on goods cleared to its own DTA Unit does not survive, accordingly, we do not find any merit in appeal of the revenue.

As regard CVD, we find from the annexure to the show cause notice that in show cause notice and the impugned order no allegation or reasoning of any nature in raising such a demand was indicated and the demand was confirmed merely by relying upon demand chart which is an annexure to the SCN. As we find no allegations for demand has been stated either in the show cause notice nor there are any reasoning in the impugned orders for confirmation of such demand, we are of the considered view that such demand cannot be confirmed as it is not in accordance with law. As regard plea of revenue neutrality raised by the Ld. Counsel, we find strong force in the contentions as there is no dispute that clearances were made by M/s STI to their own DTA Unit and the credit of SAD and CVD was available to the DTA Unit, hence the entire issue is revenue neutral. In such case it cannot be said that there has been intentional evasion of payment of duty by the appellant assessee. We find that the goods were cleared on invoices indicating all the particulars and we do not find any deliberate act on the part of the assessee to evade payment of duty. We are of the view that the demands raised by invoking extended period of limitation on this count are not invokable. For the foregoing reasons also we hold that the demand of SAD and CVD is unsustainable. However in respect of demand of CVD, based upon our above findings we hold that only the demand falling under normal period of limitation is sustainable, we hold it so. Since the most of the demand is set aside, having held that there was no intention to evade duty, we find that penalties imposed are unwarranted and they are set aside.

In view of the above observation and findings we dismiss the appeal filed by the revenue and allow the appeal filed by M/s STI to the extent that the demands of CVD raised by invoking extended period of limitation are not sustainable and only the demand of CVD under normal period would survive. We also set aside the penalty imposed under Section 11AC.

Both the Appeals are disposed of in above terms and cross objections filed by assessee also stand disposed of.

Decision:-Revenue appeal dismissed/Assessee Appeal disposed of.

Comment:-The substance of this case is that100% EOU clearing the goods in DTA to its own unit (sister concern) under stock transfer is not liable to pay SAD in view of the decision given in the case of M/s MICRO INKS Vs. CCE, DAMAN.

Prepared By: Meet Jain

Comments

PJ/CASE LAW/2014-15/2494

Post a Comment

Query