2017 (1) TMI 1817 - AT - Central Excise

Demand of Differential duty - 100% EOU - clearances to the DTA without authorization - benefit of concessional rate of duty @ 50% under Notification No. 23/2003 denied - HELD THAT - At the time of clearance of the scrap in DTA the SION norms were not available to the appellants. However, the same has since been fixed by the DGFT vide their letter dated 23.2.2009. The concessional rate of duty @ of 30% envisaged under Notification no. 23/2003 dated 31.3.2003 is available in cases where such scrap has been allowed to be cleared in DTA. The differential duty has been demanded for different periods by Revenue by taking that view that since no norms were available at the time of clearance of the scrap, the same are to be considered as cleared without authorization and hence not entitled to the benefit of the notification. Since the input output norms have since been fixed by the DGFT the benefit of concessional rate for the scrap will be available to the appellants. It is considered necessary to remand the matter to the original adjudicating authority for verifying the calculation of the quantum of scrap cleared by the appellants during various periods covered under the present appeals - appeal allowed by way of remand.

Summary

Issues: Determination of entitlement to clear scrap in the Domestic Tariff Area (DTA) at a concessional rate of duty under Notification No. 23/2003 without input output norms fixed by the Director General of Foreign Trade.

Analysis:
1. The appellant, a 100% Export Oriented Unit (EOU) engaged in manufacturing and exporting automobile parts, imports aluminum ingots to convert them into castings for automobile parts. During this process, scrap is generated and cleared in the DTA at a concessional rate of duty. The Revenue contended that the appellant was not entitled to clear the scrap in the DTA as no input output norms were fixed by the Director General of Foreign Trade. Consequently, demands for differential duty were raised and confirmed against the appellant.

2. The appellant argued that although no input output norms were initially fixed, the DGFT later established SION norms for scrap clearance. They highlighted a letter from the Assistant Development Commissioner of Noida Special Economic Zone, which set the input output norm based on the appellant's request. The Commissioner (Appeals) had previously considered SION norms for subsequent periods, leading to the withdrawal of demands for differential duty. The appellant sought a similar decision for the period covered by the present appeals.

3. The Revenue maintained its stance, emphasizing the absence of SION norms at the time of scrap clearance. However, the DGFT subsequently fixed the norms, making the concessional rate of duty applicable for scrap cleared in the DTA. The Tribunal deemed it necessary to remand the matter to the original adjudicating authority to verify the quantum of scrap cleared during various periods. The authority was directed to extend the concessional rate of duty benefits based on the approved SION limits. A two-month timeline was set for completing this verification process, allowing the appellant to submit necessary details and evidence.

This judgment clarifies the importance of input output norms in determining entitlement to clear scrap in the DTA at concessional duty rates under specific notifications. It highlights the significance of subsequent establishment of SION norms by the DGFT and the need for proper verification and adherence to approved limits for granting duty benefits.