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CX – Erection of Thermal Power plant came to a standstill due to unrest in Syria – duty free goods procured from Indian manufacturers could not be exported inspite of extensions – confirmation of duty demand is a consequence of rejection of further extension: CESTAT

2019-TIOL-2434-CESTAT-ALL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, ALLAHABAD
COURT NO. I

Excise Appeal No. 70147 of 2018-Division Bench

Arising out of Order-in-Appeal No. NOI-EXCUS-001-APP-1296-17-18, Dated: 13.10.2017
Passed by Commissioner (Appeals) Central Tax, Noida

Date of Hearing: 23.05.2019
Date of Decision: 23.05.2019

M/s BHEL PEM POWER SECTOR
(POWER PLANT ENGINEERING INSTITUTE, PLOT NO.25
SECTOR 16-A, NOIDA)

Vs

COMMISSIONER OF CENTRAL EXCISE
NOIDA-I, (SECTOR-62, NOIDA)

Appellant Rep by: Shri Rupesh Kumar, & Pravesh Bahuguna, Advs.
Respondent Rep by: Shri Gyanendra Kumar Tripathi, AR

CORAM: Archana Wadhwa, Member (J)
Anil G Shakkarwar, Member (T)

CX – The assessee was granted a contract from Government of Syria for erection of a Thermal Power Plant in Syria – For fulfillment of said project, the assessee procured various capital goods from Indian manufacturer, in terms of Notfn 42/2001-CE(NT) which provides exemption, subject to fulfillment of certain conditions – Till 11/06/2012, the assessee was procuring goods from Indian manufacturer in terms of said Notfns and were exporting the same – There is no dispute to the said factual position – However, since there was unrest in Syria on account of terrorist activities, the assessee was directed by Indian Embassy to withdraw all its staffs from Syria – In compliance to said directions, the staff was withdrawn and the project came to a standstill – However as the project was stalled, the said duty free procured goods could not be exported by them within the period of six months, as provided in the Notfn – They sought extension of such period to export goods, which were granted from time to time – However ultimately, vide letter dated 23/02/2015, the Assistant Commissioner by referring to provisions of clause 13.6 of Chapter No.7 of Central Excise Manual, and by referring to the fact that number of extensions have already been granted, rejected the assessee’s request to further extend the period for export – Same has admittedly not been challenged by assessee – As such the same has attained finality – Result and consequence of the same is as if there is no such extension order available on record as on date – If there is no extension having been granted by Authorities, in terms of provisions of Notfn 42/2001-CE(NT), condition of said Notfn stands violated – As such, confirmation of demand is only as a consequence of earlier proceedings of rejection of extension, which issue cannot be agitated before the Tribunal at this stage – Accordingly, the confirmation of demand alongwith interest is upheld, which in any case stands deposited by assessee – Assessee submits that the export could not take place on account of bona fide reasons, which were not in the hands of assessee – As such imposition of penalty upon them is not justified: CESTAT

Appeal disposed of

FINAL ORDER NO. 71116/2019

Per: Archana Wadhwa:

After hearing both the sides duly represented by Shri Rupesh Kumar learned advocate appearing for the appellant and Shri Gyanendra Kumar Tripathi learned A.R. appearing for the Revenue, we note that the appellant was granted a contract dated 29/10/2009 from the Government of Syria for erection of a Thermal Power Plant in Syria. For fulfillment of the said project, the assessee procured various capital goods from Indian manufacturer, in terms of Notification No. 42/2001-CE(NT) which provides exemption, subject to fulfillment of certain conditions. One of the conditions annexed to the said Notification is that such duty free procured material would be exported by the assessee within a period of six months from the date of procurement of the goods or within such extended period as the appellant’s jurisdictional Central Excise Authorities may allow.

2. Till 11/06/2012 the appellant was procuring the goods from Indian manufacturer in terms of the said Notifications and were exporting the same. There is no dispute to the said factual position. However as per learned advocate since there was unrest in Syria on account of terrorist activities, the appellant was directed by Indian Embassy to withdraw all its staffs from Syria. In compliance to the said directions, the staff was withdrawn and the project came to a standstill.

3. In the meanwhile, the appellant had procured certain goods from the Indian manufacturer free of duty in terms of the above Notifications itself. However as the project was stalled, the said duty free procured goods could not be exported by them within the period of six months, as provided in the Notification. They sought extension of such period to export the goods, which were granted from time to time. However ultimately, vide letter dated 23/02/2015, the Assistant Commissioner of Central Excise, Noida, by referring to the provisions of clause 13.6 of Chapter No.7 of the Central Excise Manual, and by referring to the fact that number of extensions have already been granted, rejected the appellant’s request to further extend the period for export. It is seen that though the appellant protested against the said letter of the Assistant Commissioner before Commissioner of Central Excise by way of making a representation dated 26/02/2015 but the same was not challenged before any higher Appellate Forum.

4. As a consequence of rejection of the extension request, the present proceedings stands initiated against the appellant by way of issuance of a show cause notice dated 30/09/2015 raising demand of duty of Rs.76,86,315/-. The same stands culminated into the present impugned order passed by the Original Adjudicating Authority confirming the demand alongwith confirmation of interest and imposition of penalty of Rs.19,21,580/- under Rule, 25 of Central Excise Rules, 2002. The said order of the Original Adjudicating Authority stands upheld by Commissioner (Appeals) and hence the present appeal.

5. Learned advocate appearing for the appellant submits that the duty free procured goods were being regularly exported by them to Syria, thus reflecting upon their entitlement to the said Notification. However on account of unusual circumstances the project at Syria was stalled and they were directed to bring back their employees. It is on account of said development that the duty free procured indigenous goods could not be exported. He also draws our attention to the subsequent extension of the project by the Government of Syria extending the period for completion of the same by 103 months i.e. till March, 2022. As such, he submits that they still have the scope to export the goods and thus to fulfill the condition of the Notification.

6. Learned A.R. for Revenue submits that the appellant’s request for extension of the period for export was rejected by the Assistant Commissioner way back in February, 2015. The appellant did not challenge the said order of the Assistant Commissioner and allowed it to become final. In such a scenario, the confirmation of demand of duty is only as a consequence to rejection of their extension request.

7. Learned advocate appearing for the appellant has not disputed the fact that the period for export was being extended by the Revenue at their request and number of extension have already been granted to them. However, their ultimate request to extend the period stands rejected by the Assistant Commissioner vide his letter dated 23/02/2015 which has admittedly not been challenged by the appellant. As such the same has attained finality. Result and consequence of the same is as if there is no such extension order available on record as on date. If there is no extension having been granted by the Authorities, in terms of the provisions of Notification No.42/2001-CE(NT), condition of the said Notification stands violated. As such, we are of the view that confirmation of the demand is only as a consequence of the earlier proceedings of rejection of extension, which issue cannot be agitated before the Tribunal at this stage. Accordingly, we uphold the confirmation of demand alongwith confirmation of interest, which in any case stands deposited by the appellant.

8. At this stage, learned advocate submits that the export could not take place on account of the bona fide reasons, which were not in the hands of the appellant. As such imposition of penalty upon them is not justified. We agree with the said contention of the learned advocate and set aside the penalty imposed upon them.

9. Appeal is disposed of in above manner.

(Dictated and pronounced in open court)

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