CCE Vs. PRIME FURNISHING PVT. LTD.

JUDGEMENT

(1.) BOTH these appeals have been filed by the Revenue against two different orders -in -Appeal passed by the first appellate authority on 22.07.2004 and 22.08.2005 on the same facts. M/s. Prime Furnishing Pvt. Ltd., Mahuva, Dist. Surat (Respondent) are the manufacturers of texturised yarn, grey fabrics and MMF and is a 100% EOU. Respondent was procuring duty free raw materials from other 100% EOUs by following CT -3 procedure. As per Para 6.8 of EXIM Policy 2002 -2007, respondent was permitted to sell in DTA Rejects on payment of applicable rates of duty. Revenue observed from the returns of the respondent filed for April 2002 that 120.946 Mtrs of texturised yarn rejects were cleared in DTA without obtaining permission from the Development Commissioner. The declared value of the reject yarn was Rs. 21,77,022/ - on which Respondent paid duty in terms of Notification No. 8/97 -CE, dt. 1.3.97. A show cause notice dt. 8.5.2003 was issued to the respondent demanding duty of Rs. 39,06,725/ - which was confirmed by the adjudicating authority under OIO No. 87/ADJ/ADC -SKA/DEM/2003, dt. 27.02.2004, along with interest, and a penalty of Rs. 5 lakh was also imposed upon the respondent. An appeal against the OIO dt. 27.2.2004 was decided by Commissioner (Appeals) vide OIO No. 103/SRT/2004, dt. 20.7.2004 under which first appellate authority held that respondent is eligible to the benefit of Notification No. 8/97 -CE since indigenous raw materials were used in the manufacture of finished goods which were cleared as Rejects in DTA clearance. It was held by the first appellate authority that AC/DC should recalculate the duty in terms of the provisions of main Section 3(1) of the Central Excise Act, 1944. Penalty of Rs. 5 lakh imposed upon the respondent was also reduced to Rs. 50,000/ -.

(2.) AGGRIEVED by the OIA dt. 20.7.2004 Revenue filed appeal No. E/3176/04 on the grounds that clearances from 100% EOU are not covered by Proviso to Section 3(1) of the Central Excise Act, 1944 for payment of duty as receipt of goods under CT -3 certificate from one 100% EOU to another 100% EOU is considered as imports as per Para 9.16, 9.18 and 9.12 of EXIM Policy 1997 -2002. That benefit of Notification No. 8/97 -CE is admissible only if goods are acquired from goods manufactured in India (A DTA unit) and not imported goods received from another 100% EOU. That in the present proceedings respondent was required to discharge duty liability under Notification No. 2/95 -CE as imported goods. The issue of Rs. 50,000/ - penalty was also remanded by CESTAT to first appellate authority as per Order No. S -105/WZB/05/C -III, dt. 24.01.2005 in Appeal No. E/2790/2004.

(3.) AGGRIEVED by the OIA dt. 22.8.2005 Revenue filed appeal No. E/3884/05 on the following grounds: -