By TIOL News Service

CHENNAI, FEB 10, 2016: THE appellant is an Export Oriented Unit set up for manufacture of Instant Coffee Powder. Show Cause Notice was issued to the appellant demanding duty on "Instant Coffee Powder" cleared to DTA by wrongly availing the benefit of Notification No.43/2001-CE (NT) dt. 26.6.2001 wherein the appellant cleared "Instant Coffee" to M/s.Blend Pack, Bangalore under the above notification. The adjudicating authority in his order confirmed the demand of Runder Section 11A (2) along with interest and also imposed equivalent penalty under Rule 25 of Central Excise Rules,2002. The EOU is in appeal before the Tribunal.

On behalf of revenue, it was argued that the appellant is a 100% EOU whereas the goods were cleared to DTA without payment of duty. The goods were cleared to "DTA sale" without payment of duty and the appellants should have either exported or cleared to DTA on payment of duty whereas in this case the adjudicating authority rightly demanded duty by denying notification No.43/2001. There was no exemption or clearance of goods from EOU without payment of duty other than export.

After hearing both sides, the Tribunal held:

+ In the present case, the appellant have chosen to supply to special category of buyers covered under Rule 19 (2) of the Central Excise Rules. Duty shall be payable only if the clearances are made to general category of buyers. Rule 19 does not exclude the clearances from 100% EOU from its purview. Notification No. 43/2001-CE dated 26.06.2001 was issued under Rule 19 of Central Excise Rules. As per clause 2(ii) of the notification, exemption is allowed subject to fulfilment of the condition that provisions of the Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001, shall be followed mutatis mutandis. The goods were cleared under ARE-3 procedure to M/s. Blend Pack and receipt of the goods were accounted for by M/s. Blend Pack and intimation was sent to jurisdictional Commissioner of appellant's unit. Blend Pack is a job worker of Hindustan Level Ltd., (HLL) for further repacking and the goods were ultimately exported by HLL, which is not in dispute. Following Tribunal's decision in case of Winsome yarns Ltd, the question of demand of duty does not arise.

Accordingly, the Tribunal allowed the appeal.

(See 2016-TIOL-375-CESTAT-MAD)