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of <h1>Tribunal overturns demand, interest, penalty for non-payment of SAD on inter-unit transfers</h1> The Tribunal allowed the appeals and overturned the Order-in-Original confirming demand, interest, and penalty for non-payment of SAD on inter unit ... Duty demand - Levy of 4% SAD on clearance of goods from 100% EOU to sister concern in DTA - Audit party took an objection to non-payment of SAD on the ground that clearance made to their sister concern would fall under the category of ‘exempted from payment of sales tax’ hence they are liable to pay SAD - Interpretation of benefits of Notification No. 23/2003-cus - Held that:- Following decision of Micro Inks Vs. CCE & ST, Daman [2014 (2) TMI 207 - CESTAT AHMEDABAD] - demand of SAD on such inter unit transfers is set aside - Decided in favour of assessee. Issues: Appeal against Order-in-Original confirming demand, interest, and penalty for non-payment of SAD on inter unit transfers.Analysis:1. Issue of Demand and Penalty: The appeal was filed against an Order-in-Original confirming a demand of Rs. 3,86,401 along with interest and mandatory equal penalty for non-payment of SAD on inter unit transfers by M/s Barco Electronics Systems Pvt. Ltd. The Managing Director and Manager (Commercial) of the company were also penalized. The adjudicating authority held that as no sales tax was paid on the transfers, SAD was required to be paid. The appellants argued that judicial pronouncements favored them.2. Judicial Pronouncements: The Tribunal considered the case of Micro Inks Vs. CCE & ST, where it was held that inter unit transfers do not constitute sales transactions, and the absence of a state government notification granting exemption from sales tax means the goods are not automatically exempt. The Tribunal ruled that without a specific exemption notification, the goods were not exempt from sales tax. Consequently, the demand of SAD on such transfers was set aside.3. Decision and Conclusion: Given the precedent set by the CESTAT in the Micro Inks case, which favored the appellants, the Tribunal allowed the appeals and overturned the impugned order. The issue was deemed fully covered in favor of the appellants based on the previous ruling, leading to the setting aside of the demand and penalties imposed.
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