2019 (2) TMI 1295 - AT - Central Excise

100% EOU - return of damaged goods - goods were damaged in transit while they were taken out for export - Granite slabs - demand of duty - case of appellant is that as the goods were not cleared to DTA, they are not liable to pay duty - Held that - The Tribunal in the case of Tab India Granites (P) Ltd. 2017 (8) TMI 1161 - CESTAT CHENNAI had occasion to consider the very same issue set aside the demand - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of duty for damaged goods during export under bond.

Analysis:
The case involved the appellant, a 100% EOU engaged in manufacturing granite slabs, who faced a demand for central excise duty for goods damaged in transit during export. The appellant cleared granite slabs for export under bond, but due to accidents, some goods were returned to the factory in a fully damaged condition. The central excise duty involved in the damaged goods was significant. The original authority confirmed the duty demand, stating no provision for remission of duty once goods are cleared. Appeals were filed before the Commissioner (Appeals) who upheld the decision, leading to further appeals.

The appellant argued that since the goods were cleared under bond for export and were never cleared in DTA, they should not be liable to pay duty for the damaged goods. Reference was made to the decision in Honest Bio Vet Pvt. Ltd., where it was held that remission of duty is allowable for goods cleared for export under bond and destroyed due to unavoidable circumstances. Additionally, the appellant cited the case of Tab India Granites (P) Ltd. to support their argument that the demand for duty is not sustainable in such cases.

On the other hand, the respondent supported the findings in the impugned order and referred to the decision in the case of SVG Exports (P) Ltd. to strengthen their position.

After hearing both sides, the Tribunal considered the issue of demanding duty for damaged goods during export under bond. Referring to the case of Tab India Granites (P) Ltd. and the decision in Honest Bio Vet Pvt. Ltd., the Tribunal ruled in favor of the appellant. It was held that since the goods were cleared under bond for export and were damaged in an accident enroute, the demand for duty was not sustainable. The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, if any.