2013 (11) TMI 1213 - AT - Central Excise

100% EOU - Refund claim on difference between the duty paid on finished goods and the goods lying in stock on which duty was paid earlier Held that - An 100% EOU must be continued to be treated as EOU/EHTP/STP unit till the date of final exit order Relying upon CCE, Vadodara Vs. Solitaire Machine Tools Pvt. Ltd. 2002 (11) TMI 165 - CEGAT, MUMBAI Bajaj Foods Ltd. Vs. Commissioner of Central Excise, Ahmedabad 2011 (10) TMI 189 - CESTAT, AHMEDABAD - a unit would continue to be treated as EOU unit till the date of final exit order and would be subject to monitoring of the stipulated obligations under the relevant schemes - the goods lying in stock at the time of debonding would be liable to duty only at point of time of removal of those goods from place of manufacture. There was no removal of goods into DTA from EOU and before the final debonding order the goods had been exported out of India under advance authorization claim - In terms of para 6.18 (e) of the Foreign Trade Policy, while between the date of issue of no dues certificate by the Customs and Central Excise Authorities and the date of final debonding order by the Development Commissioner, the EOU unit shall not be entitled to claim any duty exemption for procurement of capital goods or inputs, the unit can claim advance authorization/DEPB/duty draw back - during the intervening period between the date of no objection certificate by the Central Excise Authorities and the date of issue of final debonding order by the Development Commissioner, an EOU can export the finished goods under claim for advance authorization/DEPB/duty draw back and that no excise duty can be charged in respect of such goods as the same have not been cleared into DTA the order rejecting the refund claim is not sustainable Decided in favour of Assessee.

Summary

Issues:
1. Duty payable on finished goods for debonding.
2. Rejection of refund claim by jurisdictional Asstt. Commissioner.
3. Upholding of the order by Commissioner (Appeals).

Issue 1: Duty payable on finished goods for debonding

The appellant, a 100% EOU, sought debonding approval, subject to payment of customs and excise duty on stock. Discrepancy arose regarding duty calculation for finished goods meant for export. Appellant paid Rs.29,17,195/- despite claiming only Rs.6,31,360/- was due. After exports, a refund claim of Rs.22,85,835/- was rejected by Asstt. Commissioner, citing duty liability under Central Excise Act. Tribunal analyzed the duty liability before final debonding order and noted the goods were exported under advance authorization scheme, not cleared into DTA. The impugned order was deemed unsustainable, and the appeal was allowed.

Issue 2: Rejection of refund claim by jurisdictional Asstt. Commissioner

The Asstt. Commissioner rejected the refund claim, emphasizing duty payment on finished goods as per Foreign Trade Policy and Central Excise Act provisions. Appellant's argument of duty exemption for exported goods before final debonding order was considered. The Tribunal referenced relevant case laws and policy provisions, highlighting the treatment of 100% EOU units until final exit order and the permissibility of export benefits during the transition period. The impugned order was set aside, concluding that no excise duty was chargeable for goods exported under advance authorization, leading to the allowance of the appeal.

Issue 3: Upholding of the order by Commissioner (Appeals)

The Commissioner (Appeals) upheld the Asstt. Commissioner's order, supporting the duty liability on finished goods during the debonding process. The defense reiterated the duty payment requirements under the Foreign Trade Policy and Central Excise Act. However, the Tribunal scrutinized the duty implications for goods not cleared into DTA but exported under advance authorization. The Tribunal's analysis of relevant provisions and case precedents led to the reversal of the impugned order, highlighting the unsustainable nature of the decision and ultimately allowing the appeal.