Suresh Synthetics, M.G. Sharma Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. the three stay application in these appeals emerging from the same order are being disposed off by this common order.2. appellants, in appeal no. e/1598/04-mumbai, are a 100% eou on whom duty demands of central excise duty have been confirmed along with penalty under rule 209. appellant in appeal no. h/1595/04 mumbai is director of 100% eou assessee company and in k/1600/84 is the purchaser of the goods supplied by the 100% eou under para 9.10(b) of the exim policy 1997-2002. they have been penalized under rule 209a.3. commissioner relying on the decision in case of m/s himalaya international (2003 (154) elt 580 (tri lb) holding that duties would be liable under proviso to section 3 of the central excise act and the argument use of different words 'sale' in para 9.9 & 'supply' as per 9.10 (b) would not change the situation, and notification 125/84 is not attracted and benefit of notification 2/95 is not eligible, arrived at duty liability and penalty liability on the manufacture, the 100% eou.as regard penal liability. on the other two appellants penal liability under rule 209a was arrived. a) i) the appellants had an order from cce (appeals) that central excise duty is not applicable to 'supplies' made under para 9.10(b) of the exim policy & tribunal has rejected the revenue appeal. ii) cce (appeals), in appellants own case (no. 579/srt/2002 dated 31.5.2002) again held that for the supplies made under para 9.10 (b) no central excise duly was chargeable. stay sought by revenue against this order has been rejected by this tribunal. therefore, we find force in the appellants contention to grant waiver of the pre-deposit now required. b) exemption notification 125/84 ce, exempts in full duty under section 3 of the central excise act, 1944, all excisable goods produced or manufactured in an eou except goods 'allowed to be sold'. thus the effective levy under the act is only on certain goods, manufactured, not on all other goods manufactured in a eou and removed, captively consumed exported etc. value of goods removed under para 9.10 (b), as in this case, as per the exim policy, goes to reckon the 25% dta sale quote. these clearances which go to reckon 25% dta quota cannot be equated with, the clearances made under the dta quota. these clearances under para 9.10(b) are suigenris and are therefore exempted from duty by notification 125/84. therefore at this prima facie stage full waiver and stay is called for. c) the commissioners order has not taken cognizance of the supreme court decision in case of siv industries ltd (2000 (117) elt 281, wherein the term 'allowed to be sold' has been interpreted by the court and as recorded even by the union of india in the affidavit filed in that case to the effect. "18.... it also becomes apparent that in view of the eou scheme as modified from time to lime and corresponding amendments to section 3 of the act, the expression "allowed to be sold in india" in proviso to section 3(1) of the act is applicable only to sales made up to 25% of production by 100% eou in dta and with permission... .... " this very decision in para 22 records, after referring to the counter affidavit filed by the revenue in that appeal, as "22... ... ... it will thus be seen that it is the stand of the revenue itself that proviso to section 3(1) of the act is applicable to 25% of goods sold by an eou in dta". in this view the expression "allowed to be sold", as per apex court and revenue affidavit would be applicable to sale of only 25% of production by an eou in the dta i.e. dta quota. removals in the present case, which are not equated to or bound within that 25% quota of dta to be sold, but which are reckoned to determine that dta quota and arc clearances permitted beyond this quota and the commissioner finding and equating them cannot be upheld. d) when duty prima facie is found to be exempted in full, penalty under rule 209, can be therefore be dispensed and stayed pending the hearing. e) when there were orders existing and available of no duty liability, the penalty arrived at on appellants herein, under rule 209a cannot be upheld at this prima facie stage. there is a good case for granting of full waiver and stay.5. when duty determination as per the interpretation placed by the appellants based on supreme court decision and revenue stand in affidavit in the supreme court on a prima facie are in favour of the appellant. the decision relied by ld jt cdr in the case of virlon textile mills 2002 (139) elt 371 which has been appealed in the supreme court and those appeals are under consideration. we find no reason to apply the said decision at this stage. a prima facie case of waiver and stay has been made out in all then applications. applications to be disposed by ordering the same.6. the stay application in appeal filed by revenue in appeal no.e/3489/02 mumbai against the order of cce (appeals) holding no duty required to be determined in case of the same applicant was dismissed vide c-iii/1225/wzb/ dated 2.9.03. since the issue involved is the same, it would be in the interest of both parties to get that appeal also listed along with these appeals. they should move required applications for the same. keeping in mind the amounts involved. early hearing is granted and fixed on 30.09.2004.

Judgment:
1. The three stay application in these appeals emerging from the same order are being disposed off by this Common order.

2. Appellants, in appeal No. E/1598/04-Mumbai, are a 100% EOU on whom duty demands of Central Excise Duty have been confirmed along with penalty under Rule 209. Appellant in appeal No. H/1595/04 Mumbai is Director of 100% EOU assessee Company and in K/1600/84 is the purchaser of the goods supplied by the 100% EOU under para 9.10(b) of the EXIM Policy 1997-2002. They have been penalized under Rule 209A.3. Commissioner relying on the decision in case of M/s Himalaya International (2003 (154) ELT 580 (Tri LB) holding that duties would be liable under proviso to Section 3 of the Central Excise Act and the argument use of different words 'sale' in para 9.9 & 'supply' as per 9.10 (b) would not change the situation, and notification 125/84 is not attracted and benefit of notification 2/95 is not eligible, arrived at duty liability and penalty liability on the manufacture, the 100% EOU.As regard penal liability. On the other two appellants penal liability under Rule 209A was arrived.

a) I) The appellants had an order from CCE (Appeals) that Central Excise Duty is not applicable to 'supplies' made under para 9.10(b) of the Exim Policy & Tribunal has rejected the Revenue appeal.

ii) CCE (Appeals), in appellants own case (No. 579/SRT/2002 dated 31.5.2002) again held that for the supplies made under para 9.10 (b) no Central Excise duly was chargeable. Stay sought by Revenue against this order has been rejected by this Tribunal.

Therefore, we find force in the appellants contention to grant waiver of the pre-deposit now required.

b) Exemption notification 125/84 CE, exempts in full duty under Section 3 of the Central Excise Act, 1944, all excisable goods produced or manufactured in an EOU except goods 'allowed to be sold'. Thus the effective levy under the Act is only on certain goods, manufactured, not on all other goods manufactured in a EOU and removed, captively consumed exported etc. Value of goods removed under para 9.10 (b), as in this case, as per the EXIM POLICY, goes to reckon the 25% DTA sale quote. These clearances which go to reckon 25% DTA Quota cannot be equated with, the clearances made under the DTA Quota. These clearances under para 9.10(b) are suigenris and are therefore exempted from duty by notification 125/84. Therefore at this prima facie stage full waiver and stay is called for.

c) The Commissioners order has not taken cognizance of the Supreme Court decision in case of Siv Industries Ltd (2000 (117) ELT 281, wherein the term 'allowed to be sold' has been interpreted by the court and as recorded even by the union of India in the affidavit filed in that case to the effect.

"18.... It also becomes apparent that in view of the EOU scheme as modified from time to lime and corresponding amendments to Section 3 of the Act, the expression "allowed to be sold in India" in proviso to Section 3(1) of the Act is applicable only to sales made up to 25% of production by 100% EOU in DTA and with permission... .... " This very decision in para 22 records, after referring to the counter affidavit filed by the Revenue in that appeal, as "22... ... ... It will thus be seen that it is the stand of the Revenue itself that proviso to Section 3(1) of the Act is applicable to 25% of goods sold by an EOU in DTA".

In this view the expression "allowed to be sold", as per Apex Court and Revenue affidavit would be applicable to sale of only 25% of production by an EOU in the DTA i.e. DTA Quota. Removals in the present case, which are not equated to or bound within that 25% quota of DTA to be sold, but which are reckoned to determine that DTA Quota and arc clearances permitted beyond this Quota and the Commissioner finding and equating them cannot be upheld. d) When duty prima facie is found to be exempted in full, penalty under Rule 209, can be therefore be dispensed and stayed pending the hearing.

e) When there were orders existing and available of no duty liability, the penalty arrived at on appellants herein, under Rule 209A cannot be upheld at this prima facie stage. There is a good case for granting of full waiver and stay.

5. When duty determination as per the interpretation placed by the appellants based on Supreme Court decision and Revenue stand in affidavit in the Supreme Court on a prima facie are in favour of the appellant. The decision relied by Ld Jt CDR in the case of Virlon Textile Mills 2002 (139) ELT 371 which has been appealed in the Supreme Court and those appeals are under consideration. We find no reason to apply the said decision at this stage. A prima facie case of waiver and stay has been made out in all then applications. Applications to be disposed by ordering the same.

6. The stay application in appeal filed by Revenue in appeal No.E/3489/02 Mumbai against the order of CCE (Appeals) holding no duty required to be determined in case of the same applicant was dismissed vide C-III/1225/WZB/ dated 2.9.03. Since the issue involved is the same, it would be in the interest of both parties to get that appeal also listed along with these appeals. They should move required applications for the same. Keeping in mind the amounts involved. Early hearing is granted and fixed on 30.09.2004.