ORDER
K.K. Agarwal, Member (T)
1. The applicant in this case is engaged in the manufacture of Stainless Steel Utensils, Kitchenware and Cutlery articles, etc., and availing SSI exemption. They were exporting the products through their sister concern M/s. Bhalaria Steel Corporation and through some merchant-exporters. The goods were cleared to Bhalaria Steel Corporation, and to other merchant-exporter against 14B or Form H of Sales Tax Department which were to be accepted as proof of export as per simplified export procedure prescribed by the Board, under para 4.1.2 of Part III of Chapter 7 of Central Excise Mannual. Subsequently on representation from the exempted units to allow a similar facility to them in respect of the raw materials cleared by them to be used in the manufacture of export products, Board vide its Circular dated 25-7-2002 clarified that the facility of simplified procedure was available in respect of only those exempted units, which undertake exports themselves or through merchant-exporters directly from the units itself. In the applicant’s case, since the exports were not undertaken directly from the units itself but from the premises of the merchant-exporter/sister concern and a show cause notice was issued to them alleging that such sales to merchant-exporter has to be treated as domestic sales and since they crossed the exemption limit they were liable to pay duty and accordingly duty to the extent of Rs. 29,78,480/- was demanded for the period 1-4-2002 to 28-2-2003. The show cause notice also proposed imposition of penalty on the applicant under Section 11 AC as well as under Section 25 of the Central Excise Rules, 2002. The matter was adjudicated by the Commissioner, who confirmed the duty of Rs. 29,78,408.00 and a penalty of equivalent amount under Section 11AC and Rs. 3 lakhs under Rule 25 of Central Excise Rules, 2002 on M/s. Bhalaria Metal Crafts Pvt. Ltd., and a penalty of Rs. 3 lakhs on Shri Hiten-dra Bhalaria, Director of Bhalaria Metal Craft Pvt. Ltd., under Rule 26 of Central Excise Rules, 2002 was imposed.
2. Ld. Advocate for the applicants submits that though the entire exports have been undertaken from the premises of merchant-exporters the same was in accordance with the simplified procedure prescribed by Board as per para 4.1.2 of Part III of Central Excise Mannual. The clarification issued by the Board in July 2002 was in respect of those exempted units, which wanted to avail similar facility in respect of the raw materials supplied to other units for use in the manufacture of final products, which were to be exported. It was submitted that even if the clarifications was to apply to units who export their products through merchant-manufacturer, the demand cannot be raised for the period April 2002 to July 2002 when the circular was not in existence and further since the circular was circulated in September 2002 only, the demand up to this period cannot be raised even on the basis of the circular. As regards the demand for the period beyond September 2002 it was submitted that the show cause notice has been issued in the year April 2005 for the period Feb., 2003, which is beyond the period of limitation and extended period cannot be invoked as there was no suppression of facts on their part. In this regards, they referred to the statement of one of the Directors recorded on 25-9-2002, wherein he has specifically stated that the export of the goods undertaken by them were from the premises of merchant-exporters. A summon was issued on 22-9-2002 in which they were required to give some explanation in regard to the enquiry undertaken by the department for demanding duty in respect of the clearance exceeding the exemption limit. It was submitted that the matter was entirely in the knowledge of the department and therefore extended period cannot be invoked.
3. Ld. DR on the other hand submits that as per Notification 8/2002, dated 1-3-2002, the clearance of exports have to be undertaken at the factory itself as it is clearances from the factory for the purpose of export, which only are required to be excluded and since in this case first clearance has taken place to the premises of merchant-manufacturer, the said clearance cannot be considered as clearance for exports and therefore exemption provided under Notification cannot be extended to them. In regard to the submission of the applicant that some of the clearances were effected from the factory itself, it was submitted that no such pleas were made before the Commissioner and, therefore, he was not in a position to confirm the same in view of absence of any facts on record to that effect. As regards limitation, it was submitted that statements recorded from the Director and the summons issued to them was part of on going enquiry further statements were recorded in the years 2003 and 2004 as a part of that enquiry and therefore, the extended period has been rightly invoked.
4. We have considered the submissions. We find that the applicants have not been able to make out a prima facie case in their favour, both on merits as well as on limitation so as to call for complete exemption from pre-deposit of duty, as the clarification issued by the Board, makes it very clear that the intention has all along been that the simplified procedure will be applicable only in respect of those clearances, which are effected directly from the units and not from the premises other than the manufacturing unit. Further on limitation, since the statements were part of continuing enquiry which was completed in the year 2004, the extended period prima facie appears to have been rightly invoked. We accordingly, direct the applicants to deposit a sum of Rs. 5 lakhs (Rupees five lakhs) towards duty within a period of eight weeks and on such deposit there shall be waiver from pre-deposit of balance duty and penalties imposed on both the applicants and recovery thereof stayed till disposal of the appeals. Compliance to/be reported on 29-11-2006. Failure to comply with this direction, shall result in dismissal of appeals without any further notice.
(Dictated in Court)