2019 (11) TMI 623 - AT - Customs

100% EOU - utilisation of input imported for manufacture of finished goods within jurisdiction - demand of anti-dumping duty - Polypropylene (PP) Bags and Twisting Yarn - Section 28(10) of the Customs Act - demand raised on the ground that the Appellant had made DTA sales of its finished goods during the said period - whether the Appellant had utilised the inputs imported from ADD jurisdiction in the manufacture of its finished goods cleared in the DTA? HELD THAT - The charging section for imposition of ADD is Section 9A(1) of the Customs Tariff Act and the notifications issued thereunder. However, Section 9A(2A) of the Customs Tariff Act which specifically deals with an EOU starts with a non obstante clause and over-rides the charging section 9A(1). The entire demand is based on the laws of averages/proportionate consumption basis and no other tangible or appreciable evidence has been adduced in support of the charge/levy. The adjudicating authority records that an issue register for Polypropylene procured from ADD jurisdictions was maintained by the Appellant but denies the contention of the Appellant of having maintained separate records, which is not well founded. Payment of excise duty on the finished goods under S. No. 2 of Notification No. 23 as opposed to S.No. 3, which would have otherwise conferred greater benefit to the Appellant, is a prerogative of the Appellant and cannot be faulted with as it is a conditional exemption. The ratio of the decision of the Hon ble High Court in the COMMR. OF C. EX., LUDHIANA VERSUS MALWA COTTON SPINNING MILLS LTD. 2010 (2) TMI 260 - PUNJAB HARYANA HIGH COURT extracted is rendered specifically in the context of an EOU only, covers the case at hand for want of any appreciable proof or evidence to support the levy of ADD as the entire demand is based on assumptions and presumptions. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Demand of anti-dumping duty on imported Polypropylene
- Allegation of using imported inputs in manufacturing finished goods
- Maintenance of separate records for inputs from ADD jurisdictions
- Discharge of excise duty on finished goods
- Comparison of stock of inputs from Non-ADD jurisdictions with DTA clearances
- Application of Section 9A(2A) of the Customs Tariff Act for EOUs

Analysis:
1. Demand of anti-dumping duty on imported Polypropylene:
The case involved an EOU appealing against an Order confirming the demand of anti-dumping duty on imported Polypropylene under Section 28(10) of the Customs Act. The Appellant procured Polypropylene from ADD and Non-ADD jurisdictions for manufacturing finished goods.

2. Allegation of using imported inputs in manufacturing finished goods:
The dispute revolved around whether the Appellant utilized Polypropylene imported from ADD jurisdictions in manufacturing finished goods cleared in the DTA. The Adjudicating Authority based its demand on the premise of proportionate consumption, which the Appellant contested.

3. Maintenance of separate records for inputs from ADD jurisdictions:
The Appellant contended that it maintained separate records for inputs from ADD jurisdictions and utilized them only in the manufacture of export goods. However, the Authority rejected this claim, citing discrepancies between the register and the table submitted by the Appellant.

4. Discharge of excise duty on finished goods:
The Appellant argued that it discharged excise duty on finished goods under a specific notification due to predominant use of Polypropylene from Non-ADD jurisdictions, thus not availing a different exemption. The Authority's findings on this were challenged by the Appellant.

5. Comparison of stock of inputs from Non-ADD jurisdictions with DTA clearances:
Issues arose regarding the comparison of available stock of Polypropylene from Non-ADD jurisdictions with DTA clearances of finished goods. The Appellant highlighted discrepancies in the Authority's analysis, including the consideration of DTA clearances before the imposition of ADD.

6. Application of Section 9A(2A) of the Customs Tariff Act for EOUs:
The Tribunal analyzed Section 9A(2A) of the Customs Tariff Act, which governs the imposition of ADD on EOUs. It emphasized that ADD is not ordinarily leviable on EOUs unless specific conditions are met, such as the imported inputs being cleared in the domestic market. The Tribunal found the demand lacking tangible evidence and ruled in favor of the Appellant based on the absence of proof supporting the levy of ADD.