2024 (12) TMI 233 - AT - Customs

100% EOU - entitlement to benefit of N/N. 52/2003-Cus., dated 31.03.2003 and N/N. 50/2017-Cus., dated 13.06.2017 and N/N. 46/2011- Cus., dated 01.06.2011 - Revenue is of the view that the appellant could not have availed any exemption under notifications other than that provided under Notification No. 52/2003-Cus., which is specially designed for Export Oriented Unit (EOU) - suppression of facts - extended period of limitation - HELD THAT - N/N. 52/2003-Cus., is a notification which requires the importer to use the goods for the specified purposes and also account for all the goods manufactured out of the goods imported under N/N. 52/2003-Cus. The said notification also requires the appellant to fulfill export obligation the terms of the Exim Policy. The said notification also permits to Export Oriented Units, the import capital goods duty free. The goods cleared from the Export Oriented Units into Domestic Tariff Area are treated as imports and are liable to duty in terms of proviso to Section 3A of the Central Excise Act, 1944. This is done specially to provide Level Playing Field to domestic manufacturers as the export Oriented Units are allowed to import their inputs and capital goods without payment of duty. From the clarifications/circulars CBIC letter dated 09.02.2007 issued from F. No DGEP/EOU/450/2006 dated 09 February, 2007, it is clear that the Revenue has specifically allowed EOU s to avail the benefit of notifications other than Notification No. 52/2003-Cus.. In these circumstances, the stance of commissionerate of Customs is contrary to that of the supervising office i.e. CBIC. Once CBIC allows this concession the field formations cannot deny it. The impugned order is set aside and appeal allowed.

Summary

Issues Involved:

1. Whether Export Oriented Units (EOUs) can avail benefits of exemption notifications other than Notification No. 52/2003-Cus.
2. Interpretation of legal provisions concerning EOUs and their eligibility for other exemption notifications.
3. Application of clarifications issued by DGEP and TRU regarding EOUs availing benefits of other notifications.
4. Allegations of suppression or mis-declaration to invoke extended period of limitation and impose penalties.

Issue-wise Analysis:

1. Eligibility of EOUs for Other Exemption Notifications:

The primary issue in this case is whether Export Oriented Units (EOUs) are restricted to availing only Notification No. 52/2003-Cus., or if they can also benefit from other notifications such as Notification No. 50/2017-Cus. and Notification No. 46/2011-Cus. The appellant contended that there is no legal bar preventing EOUs from availing benefits under other notifications. Each exemption notification is self-contained, and any restrictions in Notification No. 52/2003-Cus. do not apply to other notifications. The tribunal found that the clarifications issued by the Directorate General of Export Promotion (DGEP) and the Tax Research Unit (TRU) supported the appellant's position, allowing EOUs to avail other notifications if they meet the conditions prescribed therein.

2. Interpretation of Legal Provisions Concerning EOUs:

The tribunal examined the interpretation of the legal provisions concerning EOUs, particularly the distinction between EOUs and Domestic Tariff Area (DTA) units. The Revenue relied on a decision by the Larger Bench of the Tribunal, which emphasized that 100% EOUs are treated differently from domestic units. The tribunal acknowledged that EOUs are primarily established for export purposes, with certain allowances for domestic sales. However, the tribunal concluded that the intent of the legislature and clarifications from the CBIC indicate that EOUs can avail other notifications if they comply with the relevant conditions.

3. Application of Clarifications Issued by DGEP and TRU:

The tribunal considered the clarifications issued by DGEP and TRU, which explicitly allowed EOUs to benefit from other notifications besides Notification No. 52/2003-Cus. The clarifications highlighted that EOUs should not be placed at a disadvantage compared to DTA manufacturers and that they can avail exemptions under other notifications if they fulfill the conditions. The tribunal found these clarifications authoritative and concluded that the stance of the Commissionerate of Customs, which denied such benefits, was contrary to the supervisory authority's position.

4. Allegations of Suppression or Mis-declaration:

The appellant argued that all relevant facts were declared in the Bill of Entry at the time of import, negating any allegations of suppression or mis-declaration. Consequently, the tribunal held that there was no basis for invoking the extended period of limitation or imposing penalties. The tribunal found that the appellant had complied with the procedural requirements and that the denial of benefits was not justified.

Conclusion:

Based on the above analysis, the tribunal set aside the impugned order and allowed the appeal. The tribunal emphasized that once the CBIC allows EOUs to avail benefits of other notifications, field formations cannot deny such concessions. The decision underscores the importance of adhering to clarifications issued by supervisory authorities and ensuring that EOUs are not unfairly restricted in availing legitimate benefits.