EURO COTSPIN LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE above appeals arise out of the order of Commissioner of Central Excise, confirming excise duty demand of Rs. 4,60,45,160/ - against M/s. Euro Cotspin Ltd. and imposing penalty of equal amount upon them and imposing penalties of Rs. 5 lakhs and Rs. 2 lakhs each on its Managing Director and Executive Director and Rs. 50,000/ -each on its Marketing Manager and Excise Officer in terms of Rule 209A of the Central Excise Rules. The case of the Department, in brief, is that M/s. Euro Cotspin Ltd. who are engaged in the manufacture, inter alia, of various varieties of cotton yam, polyester yarn, viscose yarn, etc., and exporting the goods, were also clearing them in the DTA, on payment of duty in terms of Notification 8/97 -C.E., dated 1 -3 -1997 by adopting the modus operandi of under -valuation/under invoicing. As per the Notification, exemption is available to finished products, rejects and waste or scrap produced or manufactured in a 100% EOU wholly out of raw materials produced or manufactured in India and allowed to be sold in India under and in accordance with the provisions of sub -paragraphs (a), (b), (c), (d) and (f) of para 9.9 or 9.20 of Export and Import Policy, 1997 -2002, from so much of the duty of excise leviable thereon under Section 3 of the Central Excise Act, 1944 as is in excess of an amount equal to the aggregate of the duties of excise leviable under the said Section 3 of the Central Excise Act or under any other law for the time being in force on like goods produced or manufactured in India other than in a 100% EOU or a free trade zone, if sold in India. Prior to 31st March 1999, as per Para 9.9(b) of Export -Import Policy, 1997 -2002, 25% of the production in value terms were allowed to be sold in the DTA subject to payment of applicable duties. DTA sales shall be subject to fulfillment of minimum Net Foreign Exchange earning as a percentage of exports (NFEP) prescribed in Appendix -1 of the Policy. After 31 -3 -1999, provisions of Para 9.9(b) were changed and according to the new provisions, DTA sales upto 50% of the FOB value of exports could be made subject to payment of applicable duties and fulfillment of minimum NFEP prescribed in Appendix -1 of the Policy. Thus, if the clearance from an EOU, in value terms, in DTA exceeds the limit prescribed under Para 9.9(b), the benefit of Notification 8/97 as amended could not be availed by EOU for the excess clearances in DTA on which excise duty equal to aggregate of duties of customs which would be leviable under the Customs Act, 1962 on like goods produced or manufactured in India, if imported into India ... was required to be paid. The findings of the adjudicating authority is that the goods cleared into the DTA were under valued.

(2.) WE have heard both sides. One of the main grievances of the appellant is that they were not supplied with copies of all the documents. They also submit that they could not file replies to the show cause notice as they were waiting for supply of copies of the documents which they had asked for. Although the learned SDR would deny that certain documents were not supplied and would vehemently contend that proof is available on record regarding the supply of all relied upon documents, the position is not very clear regarding supply of copies of Annexure C -II pertaining to month wise chart of the assessable value/invoice rate of different varieties of the yarn and Annexure D -I which is a calculation for duty for the period November 1997 to March 2001. Further, the defence of the appellants to the charges of the Department is not available, in the absence of any reply being filed to the show cause notice. The order is also passed without hearing the appellants. In these circumstances and further for the reasons that the plea regarding extension of benefit of Notification as the Department has not disputed the use by the appellants of indigenous raw materials, requires to be considered, although the adjudicating authority has noted clearly that several opportunities for personal hearing were afforded to the appellants and they did not avail of the same, interests of justice require that the case be heard afresh by the Commissioner to whom we remand the matter after setting aside the impugned order. He shall pass fresh orders in accordance with law after supply of copies of the documents viz. Annexure C -2 and D -I and on receipt of these documents, the appellant shall file reply to the show cause notice. Sufficient opportunity of hearing is to be extended by the Commissioner to the appellants before passing fresh orders.