2012 (9) TMI 348 - AT - Central Excise

EOU Unit - Denial of benefit of Notification No. 23/2003-C.E Exemption from payment of SAD - Held that - Notification No. 23/2003-C.E. grants exemption from payment of SAD on the condition that if the goods are cleared into DTA are not exempted by the State Government from the payment of Sales Tax - appellants cleared the goods by availing the benefit of Notification issued by the State Government, therefore, appellants are not entitled for the benefit of Notification No. 23/2003-C.E. Appeals are dismissed

Summary

Issues:
1. Refund claims for Special Additional Duty (SAD) of Customs paid by the appellant in respect of goods cleared to Domestic Tariff Area (DTA).
2. Interpretation of Notification No. 23/2003-C.E. and its applicability in the case.
3. Dispute regarding exemption from payment of Sales tax under a State Government notification.
4. Denial of benefit of Notification No. 23/2003-C.E. based on the State Government exemption.

Analysis:
1. The appellant, a 100% Export Oriented Unit (EOU) engaged in manufacturing uninterrupted power supply systems and accessories, filed refund claims seeking the refund of Special Additional Duty (SAD) of Customs paid for goods cleared to the Domestic Tariff Area (DTA). The Revenue had levied SAD on these goods, prompting the appellant to file refund claims based on the exemption provided under Notification No. 23/2003-C.E., dated 31-3-2003.

2. The core issue revolved around the interpretation and applicability of Notification No. 23/2003-C.E. The Revenue contended that the benefit of the notification is available only if the goods cleared into DTA are not exempted by the State Government from the payment of Sales tax. The appellant argued that the State Government's exemption notification was directed towards the industry as a whole and not specifically to the goods in question. The appellant maintained that since the State exemption was industry-focused and not product-specific, the denial of the benefit of Notification No. 23/2003-C.E. was incorrect.

3. The dispute further delved into the specifics of the State Government's exemption from Sales tax. The Revenue pointed out that the Karnataka State had issued a notification under Section 19C of the Karnataka Sales Tax Act, granting exemption from Sales tax for goods manufactured by specified units. As the goods manufactured by the appellant were already exempted from Sales tax under this State notification, the Revenue argued that the benefit of Notification No. 23/2003-C.E. was rightly denied.

4. Upon examination, the Tribunal found that the State Government's notification under Section 19C of the Karnataka Sales Tax Act indeed provided exemption from Sales tax for goods manufactured by units, including those of the appellant. As the appellant was clearing goods without paying Sales tax by utilizing the State Government's exemption, the Tribunal concluded that the appellant was not entitled to the benefit of Notification No. 23/2003-C.E. Consequently, the appeals filed by the appellant were dismissed based on this analysis.