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2017 (1) TMI 841 - AT - Central Excise100% EOU - Benefit of N/N. 22/2003-CE - denial on the ground that the condition of use in own unit not satisfied - transfer of capital goods for utilization in their 100% EOU for use with their captive power plant/diesel generating set - Held that - there have been substantial compliance of the conditions of N/N. 22/2003 - CE, which required that duty-free capital goods acquired by the 100% EOU should be utilised by it for manufacture of goods, which are finally exported. Accordingly, there is no error found in the Order-in-Appeal passed by Ld. Commissioner (Appeals) - appeal dismissed - decided against Revenue.
Issues:
Whether the Commissioner (Appeals) rightly allowed benefit under Notification No. 22/2003-CE to the respondent-assessee for procuring duty-free items for their 100% EOU, despite the goods being installed in an adjoining EOU owned by the same company and the failure to intimate the Revenue about the transfer of capital goods. Analysis: The appeal by Revenue challenges the Commissioner (Appeals)'s decision to grant benefit to the respondent-assessee under Notification No. 22/2003-CE for procuring duty-free items for their 100% EOU. The issue revolves around whether the conditions of the notification were violated due to the installation of the goods in an adjoining EOU owned by the same company. The Revenue argued that the respondent-assessee did not comply with the condition that the impugned goods should be used for the specified purpose of production and export of goods by the EOU. The Revenue issued a show cause notice (SCN) invoking the extended period, alleging a violation of the notification. Statements from the vice president of both units indicated that the goods were installed in the adjoining premises for convenience, believing that sharing facilities between EOUs of the same owner was permissible under legal advice based on Notification No. 50/2005-CUS. The SCN led to the adjudication where duty on capital goods was demanded from the respondent-assessee, along with penalties. The Commissioner (Appeals) allowed the appeal of the respondent-assessee, emphasizing that the failure to intimate the Revenue about the transfer of capital goods should not result in the denial of substantial benefit under the notification. The Commissioner (Appeals) noted that the capital goods were used for the intended purpose of manufacturing goods for export, despite the minor error of not informing the Revenue. The Ld. AR for Revenue relied on the grounds of appeal and the Order-in-Original, while the counsel for the respondent-assessee did not appear. Upon considering the arguments, the Tribunal found that there was substantial compliance with the conditions of Notification No. 22/2003-CE regarding the utilization of duty-free capital goods by the 100% EOU for manufacturing goods for export. Consequently, the Tribunal upheld the Order-in-Appeal passed by the Commissioner (Appeals) and dismissed the appeal filed by Revenue. The respondent-assessee would be entitled to consequential benefits in accordance with the law.
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