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2014 (12) TMI 154 - AT - Central ExciseWaiver of pre deposit - 100% EOU - capital goods were imported free of duty - while opting out from EOU scheme they applied for the zero duty EPCG licence on 18-11-2010. - Benefit of Notification No. 22/2003-C.E - Whether in respect of indigenous capital goods no Central Excise duty would be payable or whether duty at the prevailing rate on the depreciated value would be payable in terms of the provisions of Para 8 of the Notification No. 22/2003-C.E. as amended by Notification No. 24/2008-C.E. - Held that - Appellant unit had achieved the positive NFE and had been allowed by the Development Commissioner to debond and migrate to zero duty EPCG scheme - prima facie in absence of a Central Excise exemption notification prescribing nil rate or a concessional rate of duty, in respect of the capital goods procured from a 100% EOU against EPCG licence, at the time of debonding, the duty at the prevailing rate on the depreciated value in accordance with Para 8 of the Notification No. 22/2003-C.E. would be payable, even if the 100% EOU on debonding had been allowed to migrate to zero duty EPCG scheme. Thus, the appellant do not appear to have prima facie case in their favour - Partial stay granted.
Issues:
1. Interpretation of Central Excise duty liability on debonding from 100% EOU to zero duty EPCG scheme for indigenous capital goods. 2. Application of Notification No. 22/2003-C.E. and its amendment by Notification No. 24/2008-C.E. 3. Requirement of pre-deposit for hearing the appeal and stay of recovery. Issue 1: Interpretation of Central Excise duty liability on debonding from 100% EOU to zero duty EPCG scheme for indigenous capital goods The appellant, a 100% EOU, opted out to migrate to zero duty EPCG scheme after achieving positive NFE. The dispute arose regarding the duty payable on the indigenous capital goods at the time of debonding. The Department contended that duty at the prevailing rate on the depreciated value was required, while the appellant argued that no duty should be charged under the zero duty EPCG scheme. The Tribunal held that in the absence of a Central Excise exemption notification prescribing a nil or concessional rate of duty for capital goods procured from a 100% EOU against EPCG license, duty at the prevailing rate on the depreciated value was payable upon debonding, even if migrating to the zero duty EPCG scheme. The appellant was directed to deposit the full duty demand within six weeks, failing which the appeal would be dismissed. Issue 2: Application of Notification No. 22/2003-C.E. and its amendment by Notification No. 24/2008-C.E. Notification No. 22/2003-C.E., which allowed duty-free procurement of capital goods by a 100% EOU, was amended by Notification No. 24/2008-C.E. This amendment introduced a provision stating that no clearance or debonding of capital goods under the EPCG scheme would be allowed if the unit did not fulfill the positive NFE criteria at the time of debonding. However, the notifications were silent about the duty rate payable on indigenous capital goods upon debonding when migrating to the EPCG scheme. The Tribunal noted the absence of a Central Excise exemption notification prescribing a nil or concessional rate of duty for such goods, leading to the conclusion that duty at the prevailing rate on the depreciated value was applicable. Issue 3: Requirement of pre-deposit for hearing the appeal and stay of recovery The appellant requested a waiver of the pre-deposit requirement for hearing the appeal, suggesting a 33% deposit based on a previous Tribunal order. The Department opposed, advocating for a full pre-deposit to safeguard revenue interests. The Tribunal directed the appellant to deposit the full duty demand within six weeks, with the waiver of pre-deposit of interest upon compliance. Failure to deposit within the stipulated period would result in the dismissal of the appeal for non-compliance with the provisions of the Central Excise Act, 1944. This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision on each issue, providing a comprehensive understanding of the case.
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