2014 (3) TMI 514 - AT - Central Excise

Dutiability of goods - Applicant is a manufacturer of cement and they have supplied some quantity of cement to SEZ - Revenue was of the view that since the final product is exempt from duty, duty should have paid on the clinker which is an intermediate product which had come into existence in the factory and which was captively consumed - Held that - Apparently there is some contradictory in the decisions of the court while dealing with the meaning of export for the purpose of charging export duty and the manner of granting exemption from excise duty, while supplying he goods to the SEZ. The Board s Circular dated 27.12.2006 clearly states that supplies to SEZ has to be treated as export and benefits granted accordingly. Considering all these facts, we find it appropriate to waive pre-deposit of duty for the purpose of admission of appeal and we also grant stay on collection of such duty during the pendency of the appeal - Stay granted.

Summary

Issues:
1. Whether excise duty is payable on clinker supplied to SEZ when the final product is exempt from duty.
2. Whether the goods supplied to SEZ should be treated as export and exempt from excise duty.
3. Whether pre-deposit of duty and penalty should be waived in the instant case.

Analysis:
1. The issue in this case revolves around the liability of paying excise duty on clinker supplied to SEZ when the final product is exempt from duty. The Revenue contended that since the final product is duty-exempt, duty should have been paid on the clinker. The Tribunal noted the contradictory decisions regarding the treatment of supplies to SEZ as exports and the exemption from excise duty. However, considering the Board's Circular and various factors, the Tribunal decided to waive the pre-deposit of duty for the appeal's admission and stayed the collection of duty during the appeal's pendency.

2. The second issue raised was whether the goods supplied to SEZ should be considered as exports and thus be exempt from excise duty. The applicant argued that the intermediate goods used in manufacturing export goods need not pay duty as per Notification No.67/95-CE. The Revenue opposed this, stating that captively consumed goods supplied to SEZ should attract excise duty. The Tribunal acknowledged the conflicting court decisions on this matter but ultimately decided to treat supplies to SEZ as exports, granting the waiver of pre-deposit and stay on duty collection.

3. The final issue addressed was the request for waiving the pre-deposit of duty and penalty in the instant case. The applicant's counsel highlighted a previous stay granted by the Tribunal in a similar matter. The Revenue opposed the waiver, citing the excisability of clinker and court rulings. The Tribunal, after considering both sides' submissions and the Board's Circular, decided to dispense with the pre-deposit of duty for the appeal's admission and granted a stay on duty collection during the appeal. The appeal was also tagged with other related matters for joint consideration.