2013 (11) TMI 1091 - AT - Central Excise

Goods imported from DTA without payment of duty Benefit of Notification No.22/2003 and 52/2003 - Waiver of pre-deposit Held that - Waste, scrap, rejects and remnants arising out of the processing, manufacture, production or packing of articles even if not exported out of India are allowed to be cleared in the DTA on payment of appropriate duty of excise - as the waste, rejects, scrap and remnants cleared to DTA by 100% EOU are liable to duty - the waste is sold for consideration to various manufacturers of dyes and paints - Prima facie the applicants have not made out a case for total waiver of duty - the applicants are directed to deposit an amount equal to 25% of the duty as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues involved:
Waiver of pre-deposit of total duty, interest, and penalties for a 100% EOU engaged in manufacturing bulk drugs and intermediates importing solvents without payment of duty and procuring from the DTA market without duty payment. The dispute arises from the clearance of impure solvents to DTA without duty payment and the demand for duty on inputs contained in such solvents.

Analysis:
The applicants, a 100% EOU, imported solvents without duty payment and procured inputs duty-free, leading to the clearance of impure solvents to DTA without duty payment. The Revenue issued show cause notices demanding duty on the mixture of solvents and inputs contained in them. The adjudicating authority dropped the demand for duty on inputs, citing the duty demand on solvents. The applicants argue that the cleared solvents are waste from bulk drug manufacturing, not liable for duty, supported by the fact that the solvents were used in exported bulk drugs.

The applicants rely on Notification No. 22/2003-CE, claiming the waste is not a manufactured product and not subject to duty. They refer to tribunal decisions supporting their stance. The Revenue contends that the applicants availed inputs duty-free under the notification, emphasizing the specific procedures for 100% EOUs. They argue that duty demands on inputs in waste were upheld in previous cases, unlike the present scenario where the demand on inputs was dropped.

The Tribunal notes the applicants' status as a 100% EOU availing duty exemptions for inputs. Special procedures apply to EOUs under relevant notifications. The Tribunal reproduces para 6 of Notification 22/2003, allowing clearance of waste to DTA on payment of excise duty. The waste, rejects, scrap, and remnants are deemed liable for duty when cleared to DTA for consideration, indicating the applicants must deposit 25% of confirmed duty within eight weeks, with the remaining dues waived upon compliance.

In conclusion, the Tribunal upholds the duty liability on waste cleared by the EOU to DTA, directing the applicants to deposit a portion of the confirmed duty while waiving the rest, pending compliance. The judgment emphasizes the duty liability on waste and the specific procedures governing EOUs under relevant notifications.