1996 (7) TMI 377 - AT - Central Excise

Summary

Issues: Eligibility for exemption under Notification No. 123/81, Liability for payment of duty

In this judgment by the Appellate Tribunal CEGAT, MADRAS, the issue at hand pertains to the eligibility of the appellant for the benefit of exemption under Notification No. 123/81. The notification allows duty-free import of goods like capital goods, components, raw materials, etc., for 100% EOU units, provided they are used solely in the manufacture and packaging of articles meant for export. The lower authority ruled against the appellant, stating that the goods supplied, such as foundation nuts and structures, were not used in the manufacture of export goods, thus not meeting the conditions of the notification.

The appellant's counsel argued that while the goods were not directly used in manufacturing export goods, they facilitated the manufacturing process within the unit. Reference was made to a previous ruling by the Tribunal in a similar context, where duty-free concession was allowed for goods used in connection with production for export. A comparison was drawn to support the appellant's position, urging that the benefit of the notification should extend to them as well.

Upon reviewing the relevant notifications, the Tribunal noted the distinction in language between Notification No. 272/79 and No. 123/81. While the former allowed goods used "in connection with the manufacture," the latter specified goods should be used "in the manufacture" of export goods. The Tribunal acknowledged the narrower scope of the latter phrase and upheld the lower authority's decision that the appellant was not eligible for the exemption. However, a crucial question arose regarding the liability for duty payment.

The Tribunal raised the issue of duty liability, considering whether the appellant or the recipient unit should bear the duty payment responsibility. It was revealed that the appellant supplied goods based on a certificate issued by excise authorities to the export unit. The Tribunal emphasized that unless the appellant explicitly undertook duty liability if the goods were misused, they should not be held accountable for duty payment. The Tribunal directed the lower authority to determine the liability between the appellant and the recipient unit, and demand duty accordingly. The appeal was disposed of with these directions, clarifying the exemption eligibility while addressing the duty payment issue.