2018 (8) TMI 1494 - AT - Central Excise

100 % EOU - Exit from the 100% EOU scheme - duty liability to be paid by the appellants on in-process goods lying in stock - Held that - The ratio laid down by the Tribunal in Tirumala Seung Han Textiles Ltd. 2008 (9) TMI 252 - CESTAT BANGALORE will apply on all fours to the appeal on hand, where it was held that when appellant is opting out of scheme, demand in respect of in-process goods not justified - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Calculation of duty payable on exit from 100% EOU scheme.
2. Dispute over duty liability on finished goods, raw materials, and in-process materials.
3. Appeal against duty exemption on in-process materials.
4. Cross-objection against upheld duty liability.

Analysis:
1. The case involved the application for exit from a 100% EOU scheme, leading to a dispute over the duty payable on the exit. The Development Commissioner issued a letter allowing the exit, following which the duty payable was quantified by the Assistant Commissioner. Initially, a significant amount was demanded, which was later re-quantified in denovo adjudication. Subsequently, an amendment was made regarding neem seed oil duty, which was paid under protest. The Commissioner (Appeals) allowed duty exemption on in-process materials but upheld the remaining duty liability, leading to appeals and cross-objections.

2. During the hearing, the appellant reiterated the grounds of appeal, emphasizing the clearance of finished goods, raw materials, and semi-finished goods upon debonding. The argument was made that goods in-process are akin to semi-finished goods, warranting duty payment. On the other hand, the respondent's advocate pointed out that the Commissioner correctly relied on a precedent regarding the demand for duty on in-process goods, citing the decision in the case of Tirumala Seung Han Textiles Ltd. The High Court's dismissal of the department's appeal further supported this stance.

3. The Tribunal examined the precedent cited in the case of Tirumala Seung Han Textiles Ltd., which highlighted the absence of specific mention of in-process goods in the Foreign Trade Policy, leading to a lack of authority for demanding duty on such goods. The Tribunal found no reason to deviate from this established precedent, especially considering the dismissal of the department's appeal by the High Court. Consequently, the Tribunal dismissed the department's appeal against the duty exemption on in-process materials.

4. Ultimately, the Tribunal upheld the decision of the lower appellate authority, finding no infirmity in the order. As a result, the department's appeal was dismissed, and the cross-objections filed by the respondent were also dismissed as not pressed. The judgment was dictated and pronounced in open court, concluding the legal proceedings in this matter.