Transferred tax liability on customs-approved procurement of cut tobacco made supplier demand prima facie unsustainable; pre-deposit waived.

Customs-approv ed domestic procurement of cut tobacco for an export processing unit raised whether additional excise surcharge could be recovered from the supplier or whether liability had shifted to the buyer. The certificate expressly covered the surcharge and stated that tax liabilities, including surcharge, were transferred to the buyer, who had also executed a bond for that purpose. On that basis, the demand against the supplier was treated as prima facie unsustainable, and pre-deposit was waived.

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Issues: Whether, in the circumstances of supply of cut tobacco to an export processing unit under a domestic procurement certificate approved by Customs, the demand for additional duty of excise surcharge could be fastened on the supplier, and whether pre-deposit should be waived.

Analysis: The certificate specifically mentioned the surcharge now demanded and also stated that tax liabilities, including surcharge, stood transferred to the buyer. The buyer had executed a bond for that purpose. On this basis, the claim against the supplier was found to be prima facie unsustainable.

Outcome: The stay application was allowed and pre-deposit was waived.

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