2015 (10) TMI 1135 - AT - Central Excise

Duty demand - Clearance of goods without payment of duty - Rejection of request on ground that in terms of the provisions of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, they were required to execute a fresh bond in terms of Rule 3 of these rules backed by a bank guarantee for the sufficient amount to cover the duty involved on the goods being procured free of duty, but they have not furnished such bond or bank guarantee. - Held that - In terms of Notification issued under Rule 19 for duty free procurement of the goods for use in the manufacture of the goods for export the manufacturer is required to follow the procedure prescribed under the 2001 Rules and in accordance with Rule 3 of these Rules, he is required to furnish a bond backed by security in form bank guarantee to cover the duty involved on the goods procured free of duty. However in terms of the Board s circular the condition of furnishing security has been waived in the case of certain category of exporters and one of them is star trading house. The appellant have produced a certificate issued by Ministry of Commerce certifying their status as Star trading house. Hence in view of the Board s circular mentioned above, they would be required to furnish only the bond as prescribed in Rule 3 of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 and this bond need not be backed by the bank guarantee. - Impugned order is set aside - Decided in favour of assessee.

Issues Involved:
1. Rejection of application for duty-free procurement of goods for export under Rule 19(1) of Central Excise Rules, 2002.
2. Upholding of rejection order by Commissioner (Appeals).
3. Requirement of bond and bank guarantee for duty-free procurement.
4. Applicability of circular exempting certain exporters from furnishing security.
5. Resolution of dispute regarding fulfillment of conditions for duty-free procurement.

Analysis:
1. The appellant, a manufacturer exporter, exported goods without duty under bond as per Rule 19(1) of Central Excise Rules, 2002. They applied for duty-free procurement of HDPE/PP bags and steel drums but were rejected for not furnishing a fresh bond with a bank guarantee as required by the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.

2. The appeal against the rejection order was dismissed by the Commissioner (Appeals), leading to the filing of the current appeal challenging the Commissioner's decision.

3. The dispute centered around the obligation to provide a bond backed by security for duty-free procurement under Rule 19 and Notification No. 43/2001-C.E. The appellant cited a Board circular exempting certain exporters, including star trading houses, from furnishing security, which was supported by a certificate from the Ministry of Commerce certifying their status as a star trading house.

4. The Tribunal noted that as per the circular, exporters falling under specific categories were only required to furnish a bond as per Rule 3 of the Central Excise Rules without the need for a bank guarantee. Therefore, the appellant, being a certified star trading house, was directed to furnish the bond without a bank guarantee for duty-free procurement of goods.

5. Consequently, the impugned order was set aside, and the Central Excise Authorities were instructed to allow duty-free procurement of HDPE/PP bags and steel drums upon the appellant furnishing the bond in compliance with Rule 3 of the Central Excise Rules. The appeal was disposed of accordingly.

← Previous Next →