2017 (11) TMI 730 - HC - Central Excise

100% EOU - Sale of goods to DTA - interpretation of statute - Whether in the facts and circumstances of the case the CESTAT being the last fact finding body was justified in drawing conclusion that appellant has taken no permission to sell the goods in DTA, when there was no need of permission as per EXIM Policy para 9.9 for the period 1997-2002? Held that - Taking into consideration the very object of 100% export oriented and exemption of excise duty is to have earning of foreign exchange, if without prior permission of the authority, local sale is allowed then it will lead to loss of excise duty and if the prior permission is not taken, without permission, the export will not be done and locally goods will be disposed of. Clause 9.9 is to be read as intimation subject to proviso they have to take permission of the competent authority. Appeal dismissed - decided against assessee.

Summary

Issues:
Challenge to Tribunal's judgment allowing Department's appeal reversing CIT (A) view.

Analysis:
1. The appellant, a 100% EOU unit, manufactured halogen lamps under Chapter Heading No. 8539.90. They were granted EOU status with an obligation to follow EXIM Policy provisions. A shortage of goods was found during a physical verification by the Central Excise Anti-Evasion Wing, leading to a show cause notice for duty payment and penalties.
2. The appellant argued that they did not violate import-export policy provisions and deposited the disputed duty voluntarily before the notice. They cited tribunal decisions to support their stance on penalty imposition and duty payment compliance.
3. The Commissioner (Appeals-I) considered discrepancies in duty payment and shortages, focusing on the eligibility for Notification No. 2/95-CE dated 4.1.95 benefits and penalty imposition based on the Himalaya International Ltd case.
4. The appellant contended that they were entitled to exemption under the notification based on an intimation letter dated 2.6.98, which was not presented before the authorities. The respondent argued that as no permission was obtained, the benefit of the notification was not applicable.
5. The tribunal upheld the finding that without permission for local sales, the benefit of the notification was not available. Conditions for availing exemption under the notification were outlined, emphasizing the need for prior approval for local sales to maintain the export-oriented unit's purpose.
6. The Court ruled in favor of the Department, emphasizing the importance of obtaining permission for local sales to prevent loss of excise duty and ensure compliance with EOU objectives. The appeal was dismissed based on the requirement to seek authority approval for local sales to maintain EOU status and duty exemptions.