2009 (6) TMI 812 - AT - Central Excise

Summary

Issues:
1. Duty-free clearances of Derrick Cranes in CKD condition to EPCG license holders.
2. Permission granted by the proper officer for clearances.
3. Demand of duty initiated due to non-compliance with the law.
4. Argument of revenue neutrality raised by the appellants.
5. Jurisdiction of Customs vs. Ministry of Commerce regarding refund of terminal excise duty or deemed export draw back.
6. Tribunal's decision on revenue neutrality in the case of Reliance Industries Limited.
7. Rejection of the appeal based on the Tribunal's decision.

Analysis:
The case involved the appellants who cleared Derrick Cranes in CKD condition to Export Promotion Capital Goods (EPCG) license holders without payment of duty, totaling Rs. 87.5 Lakhs under 15 invoices between February 2002 to November 2002. The appellants obtained permission from the proper officer and furnished a legal undertaking for these clearances. Subsequently, it was discovered that the duty-free clearances were not in compliance with the law, leading to the initiation of proceedings demanding duty amounting to Rs. 14 lakhs, a decision upheld by lower authorities.

The appellants' advocate acknowledged that the benefit claimed was not applicable to them. However, he argued that since they had received permission for the clearances, they should not suffer the consequences. He contended that if permission had not been granted, they could have utilized other schemes like refund of terminal excise duty or deemed export draw back, maintaining that the situation was revenue neutral.

In response, the Learned SDR argued that the refund of terminal excise duty or deemed export draw back benefits fall under the jurisdiction of the Ministry of Commerce, not Customs. Citing a previous Tribunal decision involving Reliance Industries Limited, it was established that the concept of revenue neutrality does not apply to terminal excise duty refunds, and by extension, to deemed export draw back benefits, which are the responsibility of the Directorate General of Foreign Trade (DGFT).

Given the precedent set by the Larger Bench decision on revenue neutrality concerning terminal excise duty and deemed export draw back benefits, the Tribunal rejected the appeal. The appellants failed to demonstrate that the duty-free clearances to EPCG license holders were not otherwise available to them. Therefore, based on the principles outlined in the case of Reliance Industries Limited, the appeal was dismissed. The judgment was pronounced on 26-6-2009.