Contention of Adjudicating authority is misleading - Duty cannot be demanded on goods cleared by EoU to DTA under notfn. 43/2001 by following Rules, 2001 on ground that section 5A does not allow exemption: CESTAT
By TIOL News Service
MUMBAI, FEB 04, 2016: THE appellant is 100% EOU and engaged in manufacture of extruded, moulded and fabricated plastic goods,moulded products, foam sheets and other applications, valves, fittings, pipes etc. moulded fabricated and assembled plastic sheets, metallised acrylic, mirror sheets and hollow profiles, sheets, polycarbonate domes convex/concave, mirror etc. falling under Chapter 39/84 of CETA, 1985.
Appellant supplied goods without payment of duty under Notification No. 43/2001-CE (NT) by following provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of Excisable goods) Rules, 2001.
It is the Revenue view that the said Rules (supra) are applicable to a manufacturer who intends to avail benefit of notification issued under sub-section (1) of Section 5A of CEA, 1944 when used for the purpose specified in that notification. Inasmuch as the proviso to section 5A stipulates that unless specifically provided in such notification, no exemption therein shall apply to excisable goods, which are produced or manufactured -
(i) in a Free Trade Zone or a Special Economic Zone and brought to any other place in India or
(ii) by a 100% EOU Export Oriented Undertaking and brought to any other place in India.
In adjudication, the CCE, Nasik confirmed the duty demand of Rs.38,61,804/- on the ground that the appellant being 100% EOU, they can clear the goods only for export or deemed export;since in the present case the buyer i.e. M/s. GCL Equipments and Machines Pvt. Ltd. is not an exporter, therefore, appellant has wrongly cleared the goods under Notification No. 43/2001-C.E.(NT) dated 26/6/2001. Apart from imposing an equivalent penalty on the appellant, a penalty of Rs. 50,000/- was imposed on the Vice President (Excise) of the appellant and penalty of Rs. 10,00,000/- on M/s. GCL Equipments & Machines (P) Ltd.
The appellants are before the CESTAT.
It is submitted that they have not availed any exemption notification issued u/s 5A of CEA, 1944; that there is no bar or restriction for supply of goods under the Rules, 2001 (supra) to 100% EOU; that the goods were supplied under bond which was executed by the buyer and in terms of which it was undertaken that the goods shall be used in the manufacture of export goods. Reliance is placed on the following case laws viz. Narasus Exports [Final Order No. 41588/2015 dated 29/7/2015 issued on 24/11/2015, Stay order - 2009-TIOL-1448-CESTAT-MAD & Alsa Marine & Harvests Ltd - 2015-TIOL-44-SC-CUS.
The AR reiterated the departmental stand.
The Bench observed -
6. We find that the appellant have cleared the goods under statutory provisions of Notification No. 43/2001 CE (NT) dated 26/6/2001 read with the provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001. We agree with the Ld. Counsel that no restriction or prohibition is provided in the law for application of such provisions to 100% EOU. Under the above said provisions clearances are allowed without payment of duty only for the reason that the buyer undertakes to use the said duty free goods for manufacture of goods which would be exported. The contention of the show cause notice, objections of the Adjudicating authority that the restrictions provided under Section 5A, we are of the view that the appellant have not cleared the goods under any notification which was issued under Section 5A. The Notification No. 43/2001-CE (NT) and the provisions of Central Excise (Removal of goods at concessional rate of duty for manufacture of excisable goods) Rules, 2001 prescribed the procedure for clearance of the goods without payment of duty and the said notification was not under Section 5A, therefore contention of the Adjudicating authority is misleading. This issue has been considered by this Tribunal as well as by the Hon'ble High Court and removal of goods under Rule, 19 (2) has been allowed. The relevant operative paras of such judgments are reproduced below: … In view of our above discussion and issue involved in the present case is settled by the judgments cited above, we are of the considered view that the demand confirmed by the Adjudicating authority is not sustainable…."
The order was set aside and the appeals were allowed.
(See 2016-TIOL-331-CESTAT-MUM)
