2013 (4) TMI 501 - AT - Central Excise

Waiver of pre-deposit of duty & Interest - Demanding duty equivalent to Customs Tariff - The applicant is a 100% EOU. During the period in dispute applicants cleared to Bihar Public Tube-Well Project , against the International Competitive Bidding without, payment of duty treating the same as physical export - Held that - The projects under International Competitive Bidding (ICB) or similar procedure are to be treated as deemed export. Applicant also relied upon the decision of Hon ble Supreme Court in the case of Virlon Textile Mills Ltd. v. Commissioner of Central Excise, Mumbai (2007 (4) TMI 6 - SUPREME COURT OF INDIA) In these circumstances, as the goods are to be treated as deemed export which were cleared to the International Competitive Bidding and financed by the International Development Association - Prima facie - we find that the amount already deposited by the applicant is sufficient for hearing of the appeal and pre-deposit of remaining dues are waived for hearing of the appeal - Applicants are directed to keep the Bank Guarantee of Rs. 1 crore alive during the pendency of the appeal - Stay petition is allowed as indicated above.

Summary

Issues:
- Waiver of pre-deposit of duty and interest for an EOU.
- Classification of goods cleared under International Competitive Bidding.
- Interpretation of Import Export Policy for deemed exports.
- Application of relevant case law in determining duty liability.
- Benefits eligibility under the EXIM Policy for deemed exports.

Analysis:
1. Waiver of Pre-deposit: The applicant, a 100% EOU, sought waiver of pre-deposit of duty amounting to Rs. 5,51,92,879/- along with interest. The applicant had already paid Rs. 1 crore and furnished a Bank Guarantee of Rs. 1 crore based on a High Court direction challenging a show cause notice. The Tribunal found the Bank Guarantee still valid and considered the amount deposited sufficient for the appeal's hearing, waiving the remaining dues while directing to maintain the Bank Guarantee during the appeal.

2. Classification of Goods: The dispute arose from the clearance of PVC pipes and fittings to a project under International Competitive Bidding financed by the International Development Association without duty payment, treated as physical export. Revenue issued a notice demanding duty, contending the goods were not exempt, thus deemed exported into India, invoking the proviso to Section 3(1) of the Central Excise Act. The applicant argued that under the Import Export Policy, such clearances under Global Tender Conditions fulfilled export obligations, constituting deemed exports.

3. Interpretation of Import Export Policy: The applicant relied on permissions from the Development Commissioner and Ministry of Commerce, stating no duties were leviable for such clearances, aligning with the Import Export Policy's provisions. The Tribunal noted that goods supplied under International Competitive Bidding are deemed exports under the Policy, emphasizing that the demand for duty on such clearances was unsustainable based on the relevant Policy provisions.

4. Application of Case Law: The applicant referenced a Supreme Court decision in Virlon Textile Mills Ltd., emphasizing the treatment of supplies to DTA under foreign exchange provisions. Revenue argued that the Supreme Court's decision was not directly applicable to the present case, as the permissions granted fell under a different Policy provision, not covered by a specific Notification.

5. Benefits Eligibility under EXIM Policy: Revenue contended that the applicants were entitled to benefits under para 122 of the EXIM Policy for clearances under Global Tender Conditions financed by International Agencies, limiting the benefits compared to supplies under foreign exchange provisions. The Tribunal analyzed the Import Export Policy provisions, concluding that the goods cleared to International Competitive Bidding projects were deemed exports, justifying the waiver of pre-deposit for the appeal's hearing.

In conclusion, the Tribunal granted the waiver of pre-deposit for the duty and interest, considering the applicant's compliance with the Import Export Policy provisions for deemed exports under International Competitive Bidding, thereby allowing the appeal to proceed with the Bank Guarantee requirement intact.