2018 (2) TMI 528 - AT - Central Excise

100% EOU - ready-made garments cleared by M/s Abhishek Corporation Ltd for manufacture of cotton yarn knitted fabric and yarn dyed fabrics from their premises without approval for manufacture of garments and without permission for domestic tariff area clearance - Held that - the appellant had failed to include the said item in the list of goods permitted to be manufactured and exported. There is no denial that the premises from which the ready-made garments had been cleared was bonded as a 100% export-oriented unit - The duty liability on such units arises from section 3A of Central Excise Act 1944 which has an entirely different basis for assessment unlike other manufacturing units. - appeal dismissed - decided against appellant.

Summary

Issues:
1. Duty demand on "ready-made garments" by the lower authority.
2. Exemption claim by the appellant for the manufactured goods.
3. Applicability of duty liability on a 100% export-oriented unit.
4. Compliance with the list of permitted goods for manufacture and export.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai addressed the duty demand on "ready-made garments" imposed by the lower authority on M/s Abhishek Corporation Ltd, a 100% export-oriented unit. The Commissioner of Service Tax (Appeals) confirmed the duty demand, penalties, and confiscation of goods due to the absence of approval for manufacturing "garments" and clearance for domestic tariff area. The appellant contended that the manufacturing of "ready-made garments" was a separate operation and claimed exemption from duty, citing relevant tribunal decisions.

Regarding the exemption claim, the appellant argued that the goods were exempt from duty and referred to precedents like the decision in Himalaya International Ltd and Eon Polymers Ltd. On the other hand, the Authorized Representative relied on the case of Sterlite Optical Technologies Ltd to support the duty imposition. After hearing both sides and examining the records, the tribunal concluded that the appellant failed to include "ready-made garments" in the list of permitted goods for manufacture and export from the bonded premises of the 100% export-oriented unit.

The judgment highlighted the duty liability on such units under section 3A of the Central Excise Act, emphasizing the unique basis for assessment compared to other manufacturing units. It was established that the duty liability arises due to the failure to comply with the list of permitted goods for manufacturing and exporting. Consequently, the tribunal found no merit in the appeal of M/s Abhishek Corporation Ltd and dismissed the appeal, upholding the duty demand and penalties imposed by the lower authority.