2017 (8) TMI 774 - AT - Central Excise

SSI exemption - Clearance for export through merchant exporter - N/N. 9/2003-C.E., dated 28-2-2003 - Revenue alleged that the goods not cleared for home consumption cannot be cleared under concessional rate of duty under Notification No. 9/2003, hence demanded the differential duty - Held that - Unless it is shown that the clearance challenged by the Revenue is not within the total permissible clearance, exemption cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of SSI exemption under Notification No. 9/2003-C.E. for goods cleared for export
- Allegation of short payment of duty and demand of differential duty
- Interpretation of Notification No. 9/2003-C.E. regarding clearance value exclusion for goods meant for export
- Argument regarding liability to pay 9.6% of export clearance and revenue neutral situation

Analysis:

The case involved the appellant, M/s. Felis Leo Engg. Pvt. Ltd., availing SSI exemption under Notification No. 9/2003-C.E. for their clearance for export through a merchant exporter. The appellant paid duty at a concessional rate under the notification. However, the Revenue alleged that goods not cleared for home consumption cannot be cleared under the concessional rate of duty, leading to a demand for differential duty. The lower authorities confirmed the demand, prompting the appellants to approach the Tribunal.

Despite notice, no one appeared for the appellant during the proceedings. The learned AR representing the Revenue relied on the impugned order, which highlighted the grounds for confirming the demand. The Commissioner (Appeals) emphasized the issue of short payment of duty due to the appellant applying the concessional rate of duty under Notification No. 9/2003-C.E. for goods meant for export. The Commissioner upheld the demand, considering the exclusion of clearance value for export in computing the exemption limit.

The appellants argued that their liability was limited to 9.6% of the export clearance value. They contended that the duty they paid was refundable to the merchant exporter, resulting in a revenue-neutral situation. However, the Notification No. 9/2003 exempted the first clearance for home consumption, not for export. The Tribunal noted that unless it was proven that the challenged clearance was not within the total permissible clearance, the exemption could not be denied. The Tribunal found no merit in the order and considered it a revenue-neutral situation, leading to the setting aside of the penalty imposed on the appellant.

Ultimately, the Tribunal allowed the appeal, emphasizing the revenue-neutral aspect of the situation and overturning the decision of the lower authorities. The judgment was pronounced in court on 12-1-2017, providing clarity on the applicability of the SSI exemption under Notification No. 9/2003-C.E. for goods cleared for export.