2018 (6) TMI 771 - AT - Central Excise

100% EOU - post facto approval for procurement of indigenous material - appellant procured items like ceiling panels wall panels window panes thermocole under CT-3 certificate without payment of duty - demand on the ground that these items are not capital goods as envisaged in N/N. 22/2003-CE. - Held that - The Ministry of Commerce & Industry Office of the Development Commissioner Visakhapatnam SEZ has specifically granted post facto approval for procurement of the indigenous material in question - Since there is no dispute as to the receipt and consumption of material and post facto approval from the Board the impugned order on this point itself needs to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Notification No. 22/2003-CE regarding duty on procured items for a 100% EOU.
2. Classification of items as capital goods under the notification.
3. Consideration of post facto approval for procurement without payment of duty.

Analysis:
1. The appeal challenged an Order-in-Appeal regarding duty demand on items procured by a 100% EOU under Notification No. 22/2003-CE. The appellant, engaged in manufacturing instant coffee, procured items without duty payment. The dispute centered on whether these items qualified as capital goods under the notification.

2. The appellant contended that the procured items were essential for their manufacturing facility and could be categorized as capital goods under the notification. The appellant highlighted that the items were used in the factory premises for production purposes. The appellant sought to rely on Sl. No. 28 of the notification, which includes items required for the production of export goods with prior approval.

3. The Department argued that the procured items did not meet the definition of capital goods under the notification. However, the Tribunal found that the items, including ceiling panels and thermocole, were indeed used in the factory premises for maintaining required temperatures. The Tribunal noted that post facto approval was granted by the Ministry of Commerce & Industry, confirming the necessity and approval for procurement without duty payment.

4. The Tribunal emphasized the post facto approval granted by the Development Commissioner, which validated the procurement of indigenous materials without duty payment. Given the undisputed usage of the materials and the approval received, the Tribunal set aside the impugned order, ruling in favor of the appellant. The decision highlighted the significance of compliance with approval processes and the specific circumstances of the case.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Tribunal's reasoning leading to the final decision in favor of the appellant.