Raju ORDER
Raju, Member (T)
1. These appeals have been filed by M/s. Surya Life Sciences Limited and its director against confirmation of demand of duty and imposition of penalties.
2. Ld. Counsel for the appellant pointed out that the appellant is 100% EOU. A case was booked against the appellant for exceeding the limit of their DTA clearance. He argued that the entire demand is based on ER-II returns submitted by the appellant and the entire demand is raised by invoking extended period of limitation. Ld. Counsel argued that they have declared the entire clearances for export and DTA in ER-II returns and the entire case is based on the ER-II returns. In these circumstances, he argued that extended period of limitation cannot be invoked. He further argued that during this period two different audits were conducted and none of the audit had raised this issue. He also relied on the decision of the Hon'ble Gujarat High Court in the case of Commissioner v. Meghmani Dyes & Intermediates Limited - MANU/GJ/0159/2012 : 2013 (288) ELT 514 (Guj.). He submits that the facts in this case are identical. He further pointed that even on merits, the impugned order is erroneous as it treats the deemed exports as DTA clearance. Ld. Counsel relied upon the decision of the Hon'ble Gujarat High Court in the case of CCE & Cus. v. Anita Synthetics Pvt. Limited - MANU/GJ/1027/2013 : 2014 (306) ELT 133 (Guj.) to assert that deemed export is to be treated as DTA clearance.
3. Ld. AR relied on the impugned order. He further argued that the appellant is not a status holder and therefore, prior permission of Development Commissioner is required for clearances in terms of Para 6.8 of Foreign Trade Policy. Ld. AR further argued that the appellant has executed B-17 bond and in terms of the said bond duty can be demanded any time without hindrance of limitation. He further argued that the facts in the case of Meghmani Dyes & Intermediates Limited (supra) are different in so far as in the said case the appellant had permission to sell goods in DTA whereas, in the instant case, the appellant have no permission to sale in DTA.
4. In rejoinder, the ld. Counsel for the appellant relied on the decision of the Tribunal in the case of CCE, Pune v. Emcure Pharmaceuticals Limited - MANU/CM/0104/2014 : 2014 (307) ELT 180 (Tri. Mumbai) to assert that limitation provisions are applicable even when B-17 bond is executed by the assessee. He also relied on the CBEC Circular F. No. 305/86/98-FTT dated 17.11.1999 wherein it has been clarified that B-17 Bond does not cover advance DTA sale and for this purpose separate bond as prescribed in the Handbook of Procedure shall have to be executed.
5. We have gone through the rival submissions. We find that in terms of decision of the Hon'ble Gujarat High Court in the case of Anita Synthetics Pvt. Limited (supra), deemed exports cannot be clubbed for the purpose of calculation of clearances in DTA and thus, the appeal on this count is allowed.
6. A perusal of the show cause notice shows that the entire data for issue of show cause notice has been derived from the returns filed by the assessee. In the circumstances, the appellant has disclosed the entire clearances to the Revenue therefore, the charge of suppression of facts or misdeclaration cannot be invoked against the appellant. It is a failure on the part of the Revenue to detect the mistake of the appellant. In so far as the need of invocation of extended period of limitation in the cases where the B-17 Bond is executed is concerned, the matter has been clarified by the Tribunal in the case of Emcure Pharmaceuticals Limited (supra) as follows:-
"5. We have carefully considered the submissions made by both the sides. From the records it is clearly seen that the respondent had declared to the department that they would be availing the benefit of Notification 23/2003 in respect of advance DTA sales to be effected by them in terms of the permission granted by the Development Commissioner as early as in 2004 itself. Therefore, the respondent cannot be, said to have withheld any information from the department. The respondent's plea that they were entitled for the benefit of exemption under Notification 23/2003 under the belief that they were entitled for benefit of such Notification cannot be said to be a mis-declaration as held by the Hon'ble Apex Court in Northern Plastics Ltd. v. Collector of Customs & Central Excise - MANU/SC/0418/1998 : AIR 1998 SC 2371 : 1998 (101) E.L.T. 549 (S.C.). If the department felt that the respondent was not entitled to such exemption, they should have issued the show cause notice within the period stipulated under Section 11A. Revenue's reliance on the decision of the Tribunal in the case of Endress + Hauser Flowtec (I) Pvt. Ltd. (supra) does not come to their rescue for the reason that B-17 bonds are executed not only by the 100% EOUs but also units in the DTA. If Section 11A is applicable in respect of units in DTA who have executed B-17 bonds before the department, the same logic would apply in respect of 100% EOUs as well. Therefore, the argument that merely because the respondent has executed a B-17 bond they would fall outside the purview of Section 11A is illogical and irrational. One cannot interpret the law in such a way so as to make the provisions of law redundant."
Moreover, the CBEC vide its Circular dated 17.11.1999 clarifies as follows:-
"The B-17 bond does not cover advance DTA sale and for this purpose separate bond as prescribed in the Handbook of procedure (Annexure 42) shall have to be executed."
7. In view of the above, we hold that demand is not sustainable on limitation. Since the demand is not sustainable the penalties imposed on the appellant and its Director are also set-aside. Both the appeals are allowed.
(Order pronounced in the open court 14.08.2018)
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