2023 (8) TMI 612 - AT - Central Excise

Recovery of central excise duty along with interest under Section 11A and 11AB respectively and imposed equivalent penalty under Section 11AC of Central Excise Act - demand of duty on the value charged for the development of tools and dies - it is established that the goods manufactured out of the subject tools and dies were exported without payment of duty under LUT - revenue neutrality - HELD THAT - In the present case, the entire charges received by the appellant on account of tools and dies which were used in the production were on account of export of goods and there is no dispute regarding the export of goods, foreign remittance and proof of export - It is also found that the distinction made by the Ld. Commissioner (Appeals) that the export under LUT is different from export under rebate is against the export policy because the exported goods are not subject to central excise duty and the entire situation is revenue neutral. Inspite of the direction of the Ld. Commissioner (Appeals) in para 6 of the impugned order, the lower authority failed to calculate the duty even after the expiry of 10 years. The decision relied upon by the Ld. DR in the case of JAY CEE AUTO FAB (P) LTD. VERSUS COMMISSIONER OF C. EX., FARIDABAD 2010 (7) TMI 459 - CESTAT, NEW DELHI is not applicable in the facts and circumstances of this case because the said decision relates to additional consideration which is to be included in the assessable value in terms of Rule 6 of the Central Excise Valuation Rules, 2000 pertains to the domestic sale and not export of goods and hence, the said decision is not applicable in the present case because here the entire proceedings relates to export of goods. The impugned order is not sustainable in law and is set-aside.

Summary

Issues:
The issues involved in the judgment are the demand of central excise duty on tool and die charges recovered by the appellant, the distinction between export under LUT and export under rebate, calculation of duty, and imposition of penalty.

Demand of Central Excise Duty on Tool and Die Charges:
The appellant, engaged in the manufacture of Rough Forgings, Tractor Parts, and MV Parts, was found to be recovering tool and die charges from various parties without charging central excise duty. A show cause notice was issued, alleging that the tool and die charges formed part of the assessable value and were liable to Central Excise duty. The Adjudicating Authority confirmed the demand, recovery of duty, and imposed a penalty. The appellant contested the demand, stating that the proceedings related to the export of goods which are not subject to excise duty.

Distinction Between Export Under LUT and Export Under Rebate:
The Ld. Commissioner (Appeals) held that for goods exported under LUT, no duty is demanded on the value charged for the development of tools and dies. However, for exported goods cleared on payment of duty, the value of the tools and dies charges should be included in the assessable value and Central Excise duty is to be paid. The appellant requested the calculation of duty as per the direction but did not receive any information. The appellant argued that the distinction made by the Commissioner (Appeals) was against the export policy and that the entire situation should be revenue neutral.

Calculation of Duty and Imposition of Penalty:
The appellant argued that the impugned order was not sustainable as it did not properly appreciate the facts and law. The appellant claimed entitlement to a rebate of duty for charges received on account of export of goods. The appellant contended that if duty was to be paid on the tools and dies charges, they should be entitled to a refund, making the proceedings revenue neutral. The Tribunal found that the lower authority failed to calculate the duty as directed by the Commissioner (Appeals) and that the imposition of penalty was not justified as there was no evasion of excise duty.

Conclusion:
After considering the submissions and perusing the material on record, the Tribunal held that the demand of duty on tool and die charges was not sustainable. The Tribunal found that the entire charges received by the appellant were on account of export of goods, and there was no dispute regarding the export, foreign remittance, or proof of export. The Tribunal also noted that the distinction made by the Commissioner (Appeals) between export under LUT and export under rebate was against the export policy. The Tribunal set aside the impugned order, allowing the appeal of the appellant with consequential relief, if any, as per law.