9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (1) TMI 1429 - AT - Central Excise100% EOU - Liability to pay duty on goods procured without duty payment under N/N. 22/2003-CE which were destroyed in floods and not used in manufacturing goods for export - HELD THAT - Since it is an admitted position that goods were destroyed by the floods therefore its actual use in the goods which were subsequently exported out of India cannot be sustained. As regards the plea of the appellant that the said goods to be considered as if they were rejected goods and since there is a provision for destruction of rejected goods both within the factory as well as outside by applying the same ratio their damaged/destroyed goods should also be treated as rejected goods and it is also to be treated as if they have been already destroyed inside the factory itself. It is found that this stretching the provision is not permissible inasmuch there is very clear cut case where only four categories of goods are covered for destruction either within the factory or outside the factory but subject to presence of Central Excise officer. The goods which have been clearly damaged or destroyed in the floods cannot fall in any of these categories nor there is evidence that such materials were stored as scrap material or rejected in the factory. This is a conditional notification and in terms of judgment of Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT (LB) it has to be construed strictly and by the plain reading of the said notification in the given factual matrix the destroyed goods due to floods etc. would not get covered and there is no provision in the said notification for remitting the duty in a situation like natural disaster etc. Conclusion - The appellant is liable to pay the duty demanded by the department as the destroyed goods do not qualify for exemption under N/N. 22/2003-CE. The demand made by the department is tenable - Appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this case is whether the appellant, a 100% Export Oriented Unit (EOU), is liable to pay duty on inputs and packing materials procured without payment of duty under Notification No. 22/2003-CE, given that the goods were destroyed in a flood and not used in the manufacture of goods exported out of India. The specific questions are:
ISSUE-WISE DETAILED ANALYSIS 1. Relevant Legal Framework and Precedents The appellant relied on Notification No. 22/2003-CE, which allows EOUs to procure goods without payment of duty under certain conditions. Clause 3(iii) of the notification permits the destruction of rejected goods within the factory premises. The appellant also cited case laws, including Sami Labs Ltd., Aditya Industries, and Tristarr Hortitech, arguing for a broader interpretation of the notification to include goods destroyed by natural disasters as rejected goods. The respondent cited the notification's requirement that goods must be used in the production or packaging of goods for export to qualify for duty exemption. The respondent also referenced the Supreme Court's decision in CC (Import), Mumbai Vs Dilip Kumar and Co. & Ors, emphasizing strict interpretation of conditional notifications. 2. Court's Interpretation and Reasoning The Tribunal found that the notification is explicit in its conditions, allowing destruction only for specific categories of goods and under the supervision of a Central Excise officer. The Tribunal rejected the appellant's argument that destroyed goods should be treated as rejected goods, as the notification does not cover goods destroyed by natural disasters. The Tribunal noted that the appellant's cited case laws pertained to remission of duty under Rule 21 of the Central Excise Rules, which was not applicable in this case. The Tribunal emphasized the necessity of strict interpretation of the notification as per the Supreme Court's guidance in Dilip Kumar and Co. & Ors. 3. Key Evidence and Findings The appellant admitted that the goods were destroyed by floods and not used in the manufacture of exported goods. There was no evidence presented that the destroyed goods were stored as scrap or rejected materials within the factory. The Tribunal found no provision in the notification for remission of duty due to natural disasters. 4. Application of Law to Facts The Tribunal applied the strict interpretation of Notification No. 22/2003-CE, concluding that the destroyed goods did not qualify for duty exemption as they were not used in the production or packaging of exported goods. The Tribunal found the appellant's interpretation of the notification to be an impermissible extension of its provisions. 5. Treatment of Competing Arguments The Tribunal considered the appellant's argument that the destroyed goods should be treated as rejected goods under the notification. However, it found this interpretation unsupported by the notification's language and the applicable legal framework. The Tribunal also dismissed the relevance of the cited case laws, as they pertained to different legal provisions. 6. Conclusions The Tribunal concluded that the department's demand for duty was justified, as the appellant failed to meet the conditions for duty exemption under the notification. The Tribunal upheld the orders of the lower authorities, affirming the duty liability. SIGNIFICANT HOLDINGS The Tribunal's significant holdings include:
The final determination was to dismiss the appellant's appeal, confirming the duty liability for the destroyed goods.
|
