2018 (8) TMI 355 - AT - Central Excise

100% EOU - levy of duty on Empty Drums of inputs imported - whether the appellant being 100% EOU is liable to pay duty on Empty Drums of inputs imported under exemption Notification No. 22/2003-CE dated 31.03.2003 and 52/2003-CUS dated 31.03.2003? - penalty. Held that - The empty drum which is arising after use of the inputs packed therein are plastic drums and which is durable in nature and admittedly used. Therefore, as per the nature of the packing material there is no doubt that the said plastic drums are durable and re-useable, therefore the clearance of such empty drum liable for payment of duty as per N/N. 22/2003-CE dated 31.03.2003 and 52/2003-CUS dated 31.03.2003 - the demand confirmed by the lower authority is hereby upheld. Penalty - Held that - Firstly the demand was raised within the normal period, secondly, the issue involved is not suppression of fact but only of interpretation of law involved in the notification. Accordingly, there is no malafide intention on the part of the appellant - demand set aside. Appeal allowed in part.

Summary

Issues:
Whether the appellant, a 100% EOU, is liable to pay duty on Empty Drums of inputs imported under exemption Notification No. 22/2003-CE dated 31.03.2003 and 52/2003-CUS dated 31.03.2003.

Analysis:
The appellant argued that duty is only required to be paid on empty drums if they are durable and reusable as per the notification conditions. They contended that the plastic empty drums imported for inputs were not repeatedly used and were sold in the open market for household purposes after use, thus not meeting the condition for duty levy. The issue was stated to be an interpretation of the notification, with no suppression of fact or malicious intent on the appellant's part, seeking to set aside the penalty imposed.

The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order, supporting the duty imposition on the clearance of empty drums.

The Tribunal examined the nature of the plastic drums used for packing the inputs, determining them to be durable and reusable as they were used after the inputs were consumed. Consequently, the clearance of such empty drums was deemed liable for duty payment under the relevant notifications. The Tribunal referenced a similar case involving M/s Sanmar Speciality Chemicals Ltd. and highlighted the need for duty payment on used packing material as per the Foreign Trade Policy.

In a separate judgment, the Tribunal referred to the case of Commissioner of Customs, Bangalore v. Suretex Prophylactics (I) Limited, which dealt with a 100% EOU clearing empty barrels suitable for repeated use, affirming the duty liability under the relevant notification. The Tribunal rejected the appellant's claim that the barrels were not capable of further use due to lack of evidence supporting this assertion.

Based on the precedents and interpretations of the law, the Tribunal upheld the demand for duty payment on the empty drums, as settled in favor of the Revenue. The penalty under Section 11AC of the Central Excise Act, 1944, was set aside due to the absence of malicious intent on the appellant's part. The appeals were partly allowed in accordance with the judgment pronounced on 01.08.2018.