2003 (10) TMI 455 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty under Notification No. 2/95 for stock transfer of goods within the same company.

Analysis:
The case involved the appellants, a 100% EOU engaged in manufacturing Polyethylene Terepthalate Chips, who were transferring goods to another division within the company for further processing. The dispute arose when the authorities denied the benefit of Notification No. 2/95, claiming it did not apply to goods transferred on a stock basis as there was no sale involved. The authorities also alleged incorrect valuation of the goods for duty payment. The adjudicating authority upheld the demand and imposed penalties. The appellants appealed to the Commissioner (Appeals) seeking waiver of pre-deposit, but failed to comply with the deposit order, resulting in dismissal of the appeal. The appellants later cited a CBEC Circular clarifying that the Notification applied to goods transferred within the same company. The Tribunal found merit in the appellants' case based on the Circular and waived the pre-deposit of duty and penalty.

The main issue revolved around the interpretation of Notification No. 2/95 and its applicability to goods transferred on a stock basis within the same company. The Board's Circular dated 6-5-2003 clarified that the Notification covered such transfers. The Circular emphasized that the Exim Policy allowed concessional duty when goods were cleared to another DTA unit, including transfers within the same company. It highlighted that the term "DTA sale" in the policy encompassed various means of transfer, not limited to sales to independent units. The Circular emphasized the importance of valuing goods accurately in related person transactions, especially in the case of EOUs transferring goods to DTA units.

Considering the Circular and the failure of the Commissioner (Appeals) to decide the appeal on merits, the Tribunal set aside the impugned order and remanded the matter for fresh consideration. The Commissioner (Appeals) was directed to reevaluate the case on its merits after providing the appellants with a hearing opportunity. The appeals were allowed by way of remand, emphasizing the need for a thorough examination of the case in light of the Circular's clarifications.