Rakesh Kumar, Member (T) -
(1.)THE facts relating to filing of these six appeals by the Revenue are, in brief, as under:
"1.1 M/s. Birla Masuzawa Silk Mills Ltd. (hereinafter referred to as the respondent), are a 100% EOU engaged in manufacture of spun silk yarn. There is no dispute that the respondent company were manufacturing silk yarn from the domestically produced silk fibre. The period of dispute in this case is from 1998 99 to 2000 01. During this period, a 100% EOU in terms of para 9.9 of the Foreign Trade Policy could make DTA clearances of the finished products and also rejects upto 50% of the FOB value of exports, subject to payment of applicable duties. However, for DTA clearances, fulfillment of the minimum NFEP (Net Foreign Exchange Earning) should have been positive. Though, proviso to section 3(1) of Central Excise Act, 1944, provides that in respect of DTA clearances by a 100% EOU, the central excise duty leviable would be equal to the duty of customs chargeable on the import of like goods into India and that if this duty is at an ad -valorem rate, the value of goods is to be determined in accordance with Section 14 of the Customs Act, 1962, during the period of dispute, notification No. 13/98 -CE dated 02/06/1998 prescribed a concessional rate of duty of 30% of the each of the duties of Customs Leviable under section 12 of the Customs Act 1962, if the finished goods cleared into DTA had been made wholly from the raw materials produced or manufactured in India. However, this concessional rate of duty was subject to two conditions, namely,
a) The finished goods, if manufactured in DTA are wholly exempt from duties of Excise or are chargeable to nil rate of duty; and,
b) The clearances of finished goods/ rejects/scrap into DTA is in accordance with the provisions of sub para (a), (b), (c), (d) or (f) of para 9.9 or para 9.20 of the Foreign Trade policy for 1.4.1997 to 31.03.2002 period.
1.2. In this case there is no dispute that the rate of excise duty on the spun silk yarn manufactured in DTA was nil and the spun silk yarn manufactured by the respondent was manufactured wholly out of indigenous raw material. Therefore, if, the respondent were eligible for notification No. 13/98 -CE dated 02.06.1998, their duty liability would be 30% of the duties of Customs. However, in this case the respondent, except for three clearances, in rest of the clearances did not pay any duty whatsoever for which the respondent's explanation is that they were under impression since that the spun silk yarn manufactured in DTA is fully exempt from duty, the DTA clearances by them would also be fully exempt from duty. The Department's case against the appellant is that firstly DTA clearances would be liable for duty in terms of proviso to Section 3(1) of central Excise Act, 1944 and as such the duty chargeable would be the aggregate of the duties of Customs, chargeable on import of like goods into India and for this purpose, it is not relevant as to whether the same goods produce in DTA were fully exempt from excise duty or attracted nil rate of duty. It is also the Department's case that the Respondent are not eligible for notification No. 13/98 -CE dated 02.06.1998, as under this notification the concessional rate of duty is applicable only if, the clearances into DTA are in accordance with the provisions of para (a), (b), (c), (d) or (f) of para 9.9 or para 9.20 of the Exim policy, while in this case admittedly, the appellant had not achieved positive NFEP and hence, this condition prescribed in the above sub paras of para 9.9 was not satisfied. Beside this, it was also found that the DTA clearances during each financial year were far in access of the ceiling of 50% of FOB value of exports. Therefore, the Department's case is that in respect of the DTA clearances made by the respondent during the period of dispute, they were liable to pay duty at the rate applicable under proviso to Section 3(1) of Central Excise Act, 1944 without the benefit of notification No. 13/98 -CE dated 02.06.1998. The Department was also of the view that the Respondent have suppressed the relevant fact from the department, on account of which this short payment of duty amounting to Rs. 92,31,151/ - has occurred during the period from 1998 -1999 to 2000 -2001 and hence, longer limitation period under proviso to Section 11(A)(1) would be applicable for recovery of duty and for the same reason, the interest under section 11AB and penalty under Section 11AC would also be attracted and beside this, Shri Rajan Kapur, Shri Krishan Chand Mehra, Shri Bhim Rathke and Shri Debi Prasad Goenka, the Directors of the respondent Company and Shri B. Sood, General Manager of the Respondent Company would be liable for penalty under Rule 209A of the central Excise Rules, 1944. In first round of Adjudication by the Commissioner, the entire duty demand was confirmed along with interest and penalty of equal amount under Section 11AC was imposed on the respondent company, besides the imposition of penalty on Directors and General Manager. However, when the matter reached the Tribunal, the Tribunal vide Final Order No. 364 -368/04 -B dated 10.10.2003 remanded the matter to the Adjudication Authority for de novo adjudication. In de novo Adjudication, the Commissioner vide order in original dated 25.02.2005 while holding that the appellant were liable to pay duty in respect of their DTA clearances, in question, without the benefit of notification Non 13/81 -CE has held that the longer limitation period under proviso to section 11(A)(1) would not apply as the DTA Clearances being made by the respondent, were fully within the knowledge of the department and not only this, the invoices under which DTA Clearances were made, bear the signature of the Central Excise Officers, and that just because the ER -2 returns were not filed, the respondent cannot be accused of having committed a fraud or having indulged in willful misstatement or suppression of facts with intend to evade the payment of duty. He also treated the price realised by the respondent from the DTA sale of the goods as cum duty price and permitted abatement of excise duty for determining the assessable value. The Commissioner, accordingly, confirmed the duty demand of only Rs. 43,11,925/ -which was within the normal limitation period and imposed penalty of only Rs. 10,00,000/ - on the respondent company. He did not order recovery of interest under section 11AB but ordered interest under section 11AA as the same stood during that period. He also did not impose penalty on the General Manager and Directors.
1.3. The above order of the Commissioner has been reviewed by the Committee of Chief Commissioners and in pursuance of the directions of the Committee of Chief Commissioners, these six appeals have been filed. In these appeals, filed by the Revenue, the Revenue prayed for (a) confirmation of full duty demand by invoking longer limitation period under proviso to section 11(A)(1) and interest thereon under section 11AB and (b) for imposition of penalty on the General Manager and Directors of the Respondent Company under Rule 209A of the Central Excise Rules, 1944..
1.5. In the review appeal the department has also disputed, the Commissioner's decision to treat the price realised by the Respondent from DTA sales as inclusive of duty and permitting abatement of duty for determining the assessable value."
(2.)THOUGH , the notice for hearing had been issued to the respondent well in time, none representing the respondent appeared. It is seen that on earlier occasion also whenever this matter had been listed, none representing the respondent had appeared. In view of this, so far as the respondents are concerned, the matter is being decided Ex -parte in accordance with Rule 21 of the CESTAT Procedure Rules, 1982.
Heard Shri R.K. Grover, Ld. DR, who assailed the impugned order by reiterating the grounds of appeal, and emphasized, that though the Department does not dispute the Commissioner's finding, that the invoices under which the DTA clearances had been made, bear the signatures of the Central Excise Officers, the facts remains that the respondent had not been filing the ER -2 Returns containing details of the DTA Clearances, as a result of which the Department had no knowledge that they were clearing the Spun silk yarn at nil rate of duty, while even under the Notification Non 13/98 -CE, the concessional rate prescribed was 30% of the aggregate of duties of Customs. He also pleaded that the Commissioner's order not demanding interest under section 11AB is not correct when part of the duty has been confirmed by him. Similarly, he also assailed the Commissioner's order by treating the price realized by the respondent as cum duty price and permitting the abatement of duty.
(3.)WE have considered the submissions of the Ld. DR and have gone through the records of this case. In this case, the Commissioner himself has given a finding that the respondents were liable to pay duty in respect of their DTA clearances without the benefit of exemption No. 13/98 -CE. Thus, so far as the duty demand is concerned, the dispute remains only on the question of limitation - whether longer limitation period under proviso to section 11A(1) is applicable or the demand can be confirmed only for the normal limitation period and this is what has been challenged in the Revenue's Appeal. However, we find that the Commissioner while holding that only normal limitation period of one year from the relevant date would be applicable and longer limitation period under proviso to Section 11AC, cannot be applied, has taken note of the facts that -
"a) The DTA sales invoices bear the signatures of the Central Excise Officers indicating that the departmental officers knew that the DTA sales were being made at nil rate of duty and,
b) The Respondent Company had written to the Department that they intend to clear the goods into DTA on payment of applicable duty which in their case is nil."
4.1. These facts are not disputed in the order issued by the Committee of Chief Commissioners. Once it is accepted that the respondent under their letter dated 24.03.1999 had intimated the Department that they would be making DTA clearances on payment of applicable duty, which in their case is nil, and when the invoices under which the DTA clearances were made at nil rate of duty also bear the signatures of the Central Excise Officers, the Department cannot be allege that the appellant had concealed the fact of making the DTA clearances at nil rate of duty, and in this regard, in our view, non filing of ER -2 return would not make any difference, as the departmental officers otherwise knew that the respondent were making DTA clearances at nil rate of duty. It is not the allegation of the Department that the jurisdictional Central Excise Officers were in collusion with the Respondent company and had collaborated with the Respondent in evasion of duty. In view of this, we hold that there is no infirmity in the Commissioner's order holding that the longer limitation period is not applicable. Once this finding is upheld, there would be no question of demanding interest under section 11AB, as during the period of dispute, interest under Section 11AB on the duty non levied, short levied, short paid or erroneous refunded was linked with the fact as to whether non -levy, short levy, short payment or erroneously refunded of the duty was in account of any fraud, wilful misstatement, suppression of facts etc., on the part of the assessee. When these elements are not there, the interest under section 11AB cannot be charged. Since, the elements for imposing longer limitation period are not present, in our view, there would be no justification for imposition of penalty on the General Manager and Directors of the appellant company under Rule 209 -A as, for this purpose, there has to be evidence on record to show that these persons dealt with certain excisable goods in the manner specified in this rule while knowing that the goods are liable for the confiscation, while in this case there is no such evidence.