2018 (1) TMI 698 - AT - Central Excise

100% EOU - rate of duty on DTA clearances in terms of exemption under Notification No.23/03-CE dated 31.03.2003 - Held that - It is undisputed fact that M/s Indo Rama Synthetics (I) Ltd. has availed benefit of deemed export under said paragraphs of the Exim Policy and therefore, under said Explanation (ii) the supply received by appellant company were imported goods. Therefore, condition under Sl. No. 3 is not satisfied and therefore the benefit of exemption at Sl. No.3 is not admissible to the appellant company. Penalty - Held that - Since the matter was related to interpretation of notification, therefore, there was no malafide on the part of appellants - penalty set aside - personal penalty of ₹ 1 lakh imposed on Shri V.P. Yadav also set aside. Appeal allowed in part.

Summary

Issues:
Interpretation of Notification No.23/03-CE dated 31.03.2003 regarding the rate of duty on DTA clearances for goods manufactured wholly from raw material produced or manufactured in India.

Analysis:
The case involved two appeals against an Order-in-Original passed by the Commissioner of Central Excise & Service Tax, Lucknow. The dispute centered around the rate of duty on DTA clearances under Notification No.23/03-CE dated 31.03.2003. The appellant company, a 100% EOU engaged in manufacturing spun yarn, argued they were covered under Sl. No.3 of the notification, while the Revenue contended that PSF received from another company under deemed export benefits was treated as imported goods, making them ineligible for the exemption. A show cause notice was issued, leading to the Commissioner confirming a duty demand, imposing penalties, and adjudicating the case.

The appellants argued that the PSF received from the other company was manufactured in India and should be considered as raw material produced in India, thus qualifying for the exemption under Sl. No.3 of the notification. They emphasized that the goods deemed to be imported goods could still be considered as manufactured in India, and the impugned order was incorrect. On the other hand, the Revenue stressed that all conditions of the notification must be satisfied to avail the exemption, highlighting that the supply received by the appellant company was treated as imported goods under the notification.

Upon careful consideration, the Tribunal observed that the supply received by the appellant company was indeed treated as imported goods due to the deemed export benefits availed by the supplying company. Consequently, the condition under Sl. No.3 of the notification was not met, rendering the appellant ineligible for the exemption. The Tribunal upheld the duty demand but set aside the penalties imposed on the appellant company and the General Manager. The judgment was pronounced on 04/01/2018, allowing the appeal of the General Manager and partially allowing the appeal of the appellant company while partially rejecting it.