2019 (2) TMI 1296 - AT - Central Excise

100% EOU - Valuation - turbo charger components, machined castings, tools / jigs / fixtures - similar goods or not - bearing housing and turbine wheel assembly and components - concessional rate of duty under N/N. 23/2003-CE dated 31.3.2003 - DTA clearance - Held that - On perusal of N/N. 23/2003-CE, it is found that there is no such conditionality that the goods are to be produced or manufactured wholly from the raw materials produced or manufactured in India. In fact, such requirement is found only in condition 3 which in any case is not sought to be availed by the appellant. This being so, this ground for denial of the benefit is not sustainable. Requirement of taking prior permission from jurisdictional Customs / Central Excise authority for DTA sale of goods - Circular 12/2005-Cus. dated 4.3.2005 - Held that - The Circular states that EOUs are not required to take permission from the jurisdictional customs/central excise authority for DTA sale of goods. The units may sell the goods on payment of duty as per the conditions and entitlements as specified in Foreign Trade Policy - the above CBEC clarification will fully apply and hence the denial of benefit will also not succeed. Denial of notification benefit also denied on the ground that the goods cleared in DTA are not similar to the goods exported by the appellant - Held that - There is no doubt that the appellant had exported bearing housing whereas the goods to be cleared into DTA seeking benefit of Notification 23/2003 was turbo wheel assembly. While, the adjudicating authority has been at pains to cite the difference in characteristics and function of these two items, the fact remains that both of them are components of turbo charger and hence will surely fall under the broad banded term turbo charger components which is the export product as per the EOU/green card issued to the appellant by the Development Commissioner. Hence when the permission granted to appellant has not listed any specific components of a turbo charger but instead has only indicated export product as 12,50,000 nos. of turbo charger component which was even subsequently enhanced to 32,00,000 nos. of turbo charger components, the appellant cannot then be said to have caused a breach of the conditions. The impugned order in this regard cannot then sustain - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Interpretation of Notification No. 23/2003-CE for concessional rate of duty, requirement of indigenous raw materials, approval for DTA clearance, definition of 'similar goods' for DTA clearance.

Analysis:

Interpretation of Notification No. 23/2003-CE:
The appellant, a 100% EOU engaged in manufacturing and exporting turbo charger components, faced a show cause notice proposing denial of concessional duty under Notification 23/2003-CE for goods cleared into DTA. The Commissioner confirmed the demand of central excise duty and imposed a penalty. The appellant contended that the notification does not require the use of only indigenous materials and that prior approval for DTA clearance is not needed as per relevant circulars. The Tribunal found that the benefit under the notification does not depend on using only indigenous materials, and the denial based on this ground was not sustainable.

Requirement of Approval for DTA Clearance:
The appellant argued that as per Circular 12/2005-Cus., EOUs are not required to take permission from jurisdictional authorities for DTA sale of goods. The Tribunal upheld this argument, citing the circular which clarified that EOUs can clear goods on payment of duty without prior approval. Therefore, the denial of benefit based on the requirement of prior approval was deemed invalid.

Definition of 'Similar Goods' for DTA Clearance:
The key contention was whether the goods cleared in DTA were 'similar' to the exported goods, as per the definition in Customs Valuation Rules, 1988. The adjudicating authority held that bearing housing and turbine wheel were distinct parts of the turbo charger and not 'similar goods.' However, the Tribunal disagreed, emphasizing that both items were components of a turbo charger, falling under the broad term 'turbo charger components.' The permission granted to the appellant did not specify individual components but referred to turbo charger components. As both bearing housing and turbine wheel were components of a turbo charger, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.

Conclusion:
The Tribunal, after detailed analysis, ruled in favor of the appellant, setting aside the demand of central excise duty and penalty imposed under Notification 23/2003-CE. The judgment clarified the interpretation of the notification, the requirement of prior approval for DTA clearance, and the definition of 'similar goods' for concessional duty purposes, providing relief to the appellant based on the specific facts and legal provisions involved in the case.