Denial of exemption benefits under Notifications 30/2004-CE and ...

Exemption benefits upheld for EOU's DTA clearances using domestic raw materials, not imported ones.

Case Laws     Central Excise

November 12, 2024

Denial of exemption benefits under Notifications 30/2004-CE and 23/2003-CE for clearances of finished goods into the Domestic Tariff Area (DTA) by a 100% Export Oriented Unit (EOU). The appellant imported raw materials and also procured domestically for manufacturing finished goods exported and cleared to DTA. The demand pertained to differential duty on DTA clearances by availing concessional rates, considering exemption from excise duty portion. The Tribunal examined conditions under the notifications, finding the appellant eligible for exemption under Sr. No. 4 of Notification 23/2003-CE as imported raw materials were not used for DTA clearances. Denial of Sr. No. 3 benefit was incorrect as the appellant maintained separate records, ensuring domestic raw materials were used for DTA clearances. The demand of Special Additional Duty (SAD) was also incorrect as the goods were not exempted from VAT/sales tax. Regarding the extended period of limitation invoked, the Tribunal held that since the issue involved interpretation of statutory provisions without any evidence of malafide intent, fraud or suppression of facts, the larger period could not be invoked. The impugned order was set aside, and the appeal was allowed.

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