2014 (5) TMI 870 - HC - Central Excise

100% EOU - Refund claim on difference between the duty paid on finished goods and the goods lying in stock on which duty was paid earlier Maintainability of appeal - whether the order of the Tribunal relates, among other things, to the determination of any question having a relation to the rate of the duty of excise or to the value of goods for the purpose of assessment - Held that - preliminary objection to the maintainability of the appeal would have to be accepted. Among the issues, the issue which was considered by both the first adjudicating authority as well as by the appellate authority, was whether the duty which was payable on the finished goods which were lying in the stock at the time of de-bonding, was liable to be paid in accordance with the proviso (ii) to section 3(1) of the Central Excise Act, 1944. The issues which arose before both the adjudicating authority as well as the appellate authority included a determination of the status of the unit - as an EOU as claimed by the assessee or as a DTA unit as claimed by the revenue. The claim of the assessee includes a determination of whether an exemption from payment of duty would be available under the exemption notification dated 31 March 2003 which applies to an EOU. Finally, a determination was necessary on whether the unit would continue to be an EOU till the final exit order was passed on 10 June 2011 and whether the assessee would be liable to pay duty on the finished goods as on 31 March 2011 which were exported on 30 April 2011 and 16 May 2011 before the passing of the final exit order. These issues would be intrinsically connected with the rate of the duty for the purpose of assessment. - Appeal not maintainable - Decided against Revenue.

Summary

Issues:
- Maintainability of appeal under section 35G(1) of the Central Excise Act, 1944.

Analysis:
The High Court addressed the issue of the maintainability of the appeal under section 35G(1) of the Central Excise Act, 1944. The respondent, a 100% Export Oriented Unit (EOU), applied for de-bonding to operate as a DTA unit. The dispute arose regarding the duty payable on finished goods at the time of de-bonding. The Tribunal allowed the respondent's appeal, stating that no duty was payable during the transition period. The key question was whether the duty on finished goods was to be paid under the main section 3(1) or the proviso to section 3(1) of the Central Excise Act, 1944. The issues included determining the unit's status, duty rate, valuation for assessment, and exemption eligibility. The Court referred to precedents emphasizing the direct relation of questions to duty rates and goods' value for assessment in deciding appeal jurisdiction.

The Court cited the Supreme Court's interpretation that questions directly related to duty rates and goods' value fall within appeal jurisdiction. The Division Bench of the Bombay High Court also highlighted the importance of determining the unit's status in the assessment process. In this case, the issues of unit status, duty rate computation, exemption eligibility, and duty liability on finished goods were intrinsically linked to duty assessment. The Court concluded that the appeal was not maintainable under section 35G(1) based on the issues discussed. The Court clarified that its decision was limited to the preliminary objection and did not reflect on the Tribunal's order's merits. The revenue was granted the option to pursue further appellate remedies independently. Consequently, the Court dismissed the appeal, upholding the preliminary objection on maintainability.