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2018 (3) TMI 407 - AT - Central ExciseEOU - demand of interest - N/N. 52/2003-CUS and 22/2003-CE - imported raw materials on which duty has been foregone and material utilised for manufacturing of finished goods - Held that - even if the Revenue Authorities demand the interest liability, on the raw-materials which were imported and used, the amount paid excess by the respondent would suffice for the demand of the interest, if any - It can be noticed that any excess payment can be adjusted towards the duty of payable by a person is contemplated and it would mean including the interest also and in this case there cannot be any recovery of interest - interest not warranted - appeal allowed in part.
Issues:
Demand of duty confirmed against materials imported by an EOU, Appeal against order-in-Original No.38-2007(H-I)CE, Discharge of duty liability on finished goods cleared to DTA, Setting aside of interest and penalties by 1st Appellate Authority, Revenue's appeal for the demand of interest, Adjustment of excess payment under Section 11D(4) of the Central Excise Act. Analysis: The case involves a dispute over the demand of duty confirmed by the Revenue against materials imported by an EOU. The respondent had imported raw materials on which duty was foregone and used them for manufacturing finished goods cleared to DTA. The issue revolves around the duty liability on inputs used for manufacturing finished goods cleared to DTA, as per Notification Nos.52/2003-CUS and 22/2003-CE. The 1st Appellate Authority concluded that since the appellant had discharged duty on finished goods exceeding the duty confirmed on raw materials, there was no need for further confirmation of demand, setting aside interest and penalties imposed. The Revenue appealed against the 1st Appellate Authority's decision, arguing that the duty liability on inputs should be confirmed and interest and penalties should not have been set aside. The Tribunal noted that the respondent had indeed imported raw materials for manufacturing finished goods in an EOU and cleared them to DTA, paying duty which was not required. Despite the goods being exempt from duty, the respondent was obligated to discharge customs duty on imported goods used for clearance to DTA. The Tribunal found the Revenue's grievance regarding the interest being set aside as genuine and held that the appeal had merit in this regard. However, upon examining the amounts involved, the Tribunal observed that the duty liability on raw materials was around ?20,00,000, while the duty paid by the respondent on finished goods cleared to DTA was approximately ?34.68 lakhs. The Tribunal determined that even if interest liability was demanded on the imported raw materials, the excess amount paid by the respondent would cover any interest due. Citing Section 11D(4) of the Central Excise Act, the Tribunal highlighted the provision allowing adjustment of excess payments towards duty payable, including interest. Consequently, the Tribunal held that the 1st Appellate Authority's decision to set aside interest liability was unsustainable, while setting aside the penalty was deemed sustainable. As a result, the appeal filed by the Revenue was partly allowed. In conclusion, the Tribunal addressed the issues related to duty demand, discharge of duty liability on finished goods cleared to DTA, interest, and penalties, emphasizing the application of Section 11D(4) for adjusting excess payments. The judgment provided clarity on the duty obligations of the respondent and the Revenue's legitimate grievance regarding interest liability, ultimately partially allowing the Revenue's appeal.
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