ORDER
S.S. Sekhon, Member (T)
1. The instant appeal is against an Order dated 7.4.03 passed by the Commissioner of Customs (FEPZ). Learned Commissioner has confirmed the duty-demand of Rs. 7,52,89,329.75 (Rupees seven crore fifty-two lakh eighty-nine thousand three hundred and twenty-nine and paise seventy-five) under the provisions of Section 11A of the Central Excise Act, 1944 on the ground that in respect of the domestic tariff area (here-in-after referred to as DTA) sales effected by the assessee during the period from February, 1997 till May, 2001, the appellant was availing the benefit under Notification No. 2/95-CE dated 4.1.95 as amended, on the ground that they have not made the exports required within the stipulated period of three years along with the net foreign exchange earnings. The Commissioner was of the view that Notification No. 2/95-CE was linked with the EXIM Policy. The extension granted by the Development Commissioner was not provided for and will not meet the requirement of benefit of the Notification No. 2/95-CE to be granted. Equivalent amounts of penalties under Section 11AC along with the interests under Section 11AB were also ordered by the Commissioner causing this appeal.
2. The Unit had commenced its commercial production on January 2, 1997 and due to various reasons as per the request to the Development Commissioner of FEPZ, had obtained a permission to make Advance DTA Sales of 6000 MT of PET Resin as per Policy provisions of EXIM Policy, 1997-2002. The following conditions were required to be made:
(i) The item released for DTA Sales should be identifiable to the export products;
(ii) Removal should be on payment of excise duty;
(iii) A required bond should be executed in terms of EXIM Policy/Procedures, 1992-97.
3. The permission was valid for one year from the date of issue. The same was subsequently extended upto September 30, 2001. In terms of this permission granted, the appellant while continuing its export, also effected DTA sales during the period, 1996-97 till March-April, 2002. They also dispatched the goods under the provisions of Para 9.9(a)(b)(h) and Para 9.20 of the Export-Import Policy, 1992-97. The Advance DTA sales were effected and the clearance of goods from the factory were intimated and done with the permission of the Customs Authorities. However, on November 20, 2002, the Joint Commissioner of Customs, FEPZ, issued a notice requiring them to show cause as to why the said excise duty now determined should not be recovered under the provisions of Section 11A.
4. The commissioner denied the benefit of concessional rates of duty of excise under the said Notification on the following grounds:
(i) The Unit did not achieve NEEP (Net Foreign Exchange as a Percentage on Export) as required under the Export Import Policy, 1992-97 as were in force during the relevant period, i.e. 1996-97 to 2001-02, which was allegedly negative, and as such, was not entitled to clear the said goods in DTA in concessional rate of duty in terms of the said Notification.
(ii) The validity of the advance DTA sales permission should have lapsed at the end of three years, which was, however, extended upto September 30, 2001, without any legal basis under Para 9.9(b) of the Export Import Policy read with Para 9.24 of the Handbook of Procedures, by the Development Commissioner, FEPZ, as intimated by the letter dated June 21, 2002 of the incumbent Development Commissioner.
(iii) The Unit suppressed the material facts and in as much as it was only from the Development Commissioner’s letter dated June 21, 2002 whereby the Development Commissioner, who was the monitoring authority, informed ‘the party as well as the Deputy Commissioner, Falta’ that the appellant had not achieved the NEEP for the year, 1997-98 to 2000-01, which was in the negative in these years, suggesting that as per the Policy demand was needed to be raised for clearance of the said goods, the authorities came to know about the non-achievement of NEEP and therefore, the demand was not barred by limitation.
5. The matter was called today. It was submitted by the learned Advocate for the appellant that during the pendency of the present proceedings, certain developments have taken place consequent thereto, the Order of the Commissioner impugned by these proceedings will not survive. It was submitted that the appellant on February 17, 2004, had applied to the Government of India, Ministry of Commerce and Industry, Department of Commerce through the Development Commissioner, Falta Special Economic Zone for extension of the period of fulfilment, inter alia, NEEP from five years to ten years, i.e. from 1996-97 to 2001-02 (5 years) to from 1996-97 to 2006-07 (10 years) and for extension of the validity period of Advance DTA Sale Permission already obtained and effected. The appellant was informed by a letter dated 8.4.2004 from the Assistant Development Commissioner, Falta Special Economic Zone, Kolkata that the appellant’s request had been approved by the Board of Approvals, Ministry of Commerce & Industry, Department of Commerce, Government of India, but however, the proposal of extension for period of adjustment of the Advance DTA Sale had not been approved by the said Board of Approvals. On a representation made by the appellant to the Joint Secretary, Department of Commerce, Ministry of Commerce & Industry, Government of India, New Delhi, for extension of the period of validity of Advance DTA Sale Permission beyond three years, they were informed and intimated by a letter dated 19.11.2004 that the said Ministry of Commerce, vide letter F.No. 14/3/2004-EOU dated 26.10.2004, had intimated about the consideration of the relaxation of time-limit for Advance DTA Sale by the Policy Relaxation Committee based on recommendation of the said Board of Approvals, and thus, they have had the extension of the validity period for a further period upto March 31, 2005. It was submitted that in view of this extension and relaxation granted by the Government of India, the finding of the Commissioner that the appellant was not entitled to clear the goods in DTA under concessional rate of duty in terms of the Notification No. 2/95-CE dated January 4, 1995, no longer survives and is not tenable.
6. Learned Advocate appearing for the Revenue submitted that in view of the document relating to grant of permission of relaxation of conditions by the Board of Approvals, the impugned Order may not survive.
7. In view of these developments and grant of approvals by the Ministry of Commerce for the clearance effected, the duty-demand, penalties or interests could not be ordered to be sustained. The Impugned Order is, therefore, set aside and this appeal is to be allowed. Ordered accordingly.
Pronounced in the open court.