SCN issued beyond Normal Time-Limit: CESTAT quashes Customs Duty Demand [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed customs duty demand as the show cause notice ( SCN ) was issued beyond the normal time limit.

The total customs duty payable on the clearance of the 22 looms worked out to Rs.9,58,783/- whereas the appellant removed the looms on payment of duty of Rs.6,31,584/- After due process of law, the original authority confirmed the demand along with interest by invoking the extended period of limitation and imposed penalty. Aggrieved by the order, appellant filed an appeal before Commissioner ( Appeals ) who vide the impugned order upheld the adjudication order.

The Counsel for the appellant has stated that they had cleared the capital goods on payment of duty of Rs.6,31,584/- through CENVAT credit as per Rule 17(1) of Central Excise Rules, 2002 and also by availing the benefit of Notification 23/2003-CE dated 31.3.2003. He stated that this procedure for payment of duty using CENVAT credit had found acceptance as per the decision of CESTAT in the case of CCE Vs Matrix Laboratories Ltd.

The counsel stated that SCN was issued on 6.5.2013 by invoking the extended period. In the SCN, it is alleged that duty was paid by wilfully availing the ineligible exemption under notification 23/2003-CE and by wrongly utilizing the cenvat credit. In the OIA ( impugned order ), extended period was invoked on the ground that the Appellants have not furnished sufficient details in the ER-2 returns. The Advocate stated that the extended period cannot be invoked for the following reasons.

The AR stated on behalf of revenue that the appellant had contravened the provisions of Notification No. 53/1997-Cus dated 3.6.1997 read with Notification No. 52/2003-Cus dated 313.3.2003 inasmuch as they removed from their factory 22 looms imported under the above said notification during May 2008, December 2008 and September 2010 without payment of appropriate customs duty.

The exemption under Notification No. 23/2003-CE dated 31.3.2003 is applicable only to goods manufactured in the EOU. As the looms were not manufactured by the appellant in the factory, the said exemption was not applicable for clearance of looms. As per the above notification, the capital goods imported by an EOU have to be cleared on payment of applicable customs duty on the depreciated value thereof at the rate in force on the date of such clearance.

A Two-Member Bench comprising M Ajit Kumar, Technical Member and P Dinesha, Judicial Member observed that “We hence find that the appellant has not acted with dishonest or fraudulent intent and suppression of facts is not involved. This being so, question of invoking the extended time limit or imposing penalty does not arise. We do not go into the merits of the issue, due to a lack of challenge on the said grounds, further the appeal on time bar is answered in favour of the appellant. Since the Show Cause Notice has been issued beyond the normal time-limit, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.”

To Read the full text of the Order CLICK HERE

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