2005 (2) TMI 703 - AT - Customs

Export Unit Wins Appeal on Duty Liability for World Health Organization Sales

The Tribunal allowed the appeal of the appellants, a 100% Export Oriented Unit, in a case concerning duty liability for UPS sold to the World Health ... Exemption Issues: Correct determination of duty liability in respect of UPS sold to World Health Organization (WHO) by the appellants.Analysis:The appellants, a 100% Export Oriented Unit (EOU), cleared UPS to WHO and claimed exemption from excise duty under specific notifications. However, the original authority demanded duty and interest under the Central Excise Act, 1944. The Commissioner (Appeals) upheld the findings, leading the appellants to appeal before the Tribunal.During the hearing, the Revenue argued that the relevant notification would only apply if WHO directly imports the items, not when purchased from the appellant. On the other hand, the appellants contended that as per the proviso to Section 3, the duty liability should be calculated based on the aggregate of customs duties, with exemptions provided by Notification No. 2/95 read with other applicable notifications. They emphasized that the goods being allowed to be sold in India should be deemed as imported, making the customs duty leviable. The appellants highlighted that Notification No. 84/97, exempting imports for projects by international organizations in India, should be considered, resulting in nil duty liability due to the legal fiction created by the proviso to Section 3.The Tribunal agreed with the appellants, stating that the deeming provision under the proviso to Section 3 necessitates treating the goods as imported into India for duty calculation purposes. They emphasized that Notification No. 2/95 should be read in conjunction with other relevant notifications, such as No. 84/97, to determine the duty liability accurately. The Tribunal dismissed Revenue's argument that the notifications cannot be combined, asserting that the appellants were rightfully eligible for the exemptions provided. Consequently, the appeal was allowed, providing the appellants with the relief sought.In conclusion, the Tribunal's decision clarified the duty liability concerning the UPS sold to WHO by the appellants, emphasizing the correct application of relevant notifications and the legal fiction of importation for duty calculation purposes.