2015 (4) TMI 237 - SC - Customs

Supreme Court Upholds Duty Exemption for Export-Oriented Undertaking

Commissioner of Customs, Visakhapatnam (AP) Versus M/s. Alsa Marine And Harvests Ltd., Commissioner of Central Excise, Visakhapatnam Versus M/s. Alsa Marine And Harvests Ltd.

The Supreme Court affirmed the Customs, Excise & Service Tax Appellate Tribunal's decision in favor of an Export Oriented Undertaking (E.O.U) in a ... 100% EOU - Export obligation - Exemption under the Notification No. 13/81 dated 09.02.1981 - Held that:- it cannot be denied that the respondent, which is an E.O.U ., had fulfilled its legal obligation of exporting the manufactured goods as per Notification (General Exemption No. 127). Notification lays down three conditions and on fulfillment thereof, an E.O.U . becomes entitled to the exemption. - it could not be denied by the appellant that the respondent-undertaking had exported out of India 100 per cent of articles manufactured by it. The only argument which is sought to be raised is that the unit at Bhimli (Visakhapatnam) which was given the status of E.O.U . has not fulfilled this obligation and in fact, goods were sent to Chennai unit and it is from Chennai unit that the export was effected. We hardly see it to be a ground to deny the exemption. As mentioned above, it is the respondent, namely, M/s. Alsa Marine & Harvests Ltd., which is an E.O.U . and it is this undertaking which has fulfilled its obligation under the aforesaid notification. Whether it is done from Bhimli (Visakhapatnam) or Chennai unit, would be totally irrelevant and immaterial - No error in the order passed by the CESTAT - Decided against Revenue. Issues:1. Duty exemption on imported and indigenous goods.2. Violations related to clearance of goods to DTA.3. Appeal against penalty and confiscation.4. Interpretation of conditions for exemption under Notification No. 127.5. Fulfillment of export obligation by E.O.U.6. Location of export and entitlement to exemption.Analysis:1. The case involves an Export Oriented Undertaking (E.O.U) engaged in the freezing and export of marine products. The respondent imported goods without paying customs duty under Notification No. 13/81 and obtained indigenous goods without central excise duty under Notification 123/81. Subsequently, violations were found in the clearance of goods to the Domestic Tariff Area (DTA), leading to a demand notice for duty payment.2. The respondent challenged the demand notice before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which set aside the penalty and confiscation imposed by the Commissioner. The Tribunal ruled that duty leviable under Customs and Excise Acts did not apply as the goods were exported from the E.O.U, and Chapter V-A of the Central Excise Rules was relevant to E.O.U removals.3. The Supreme Court noted that the respondent fulfilled the export obligation as per Notification No. 127, which outlined conditions for duty exemption. The Court emphasized that the E.O.U exported 100% of the manufactured articles, meeting the exemption criteria. The Court rejected the argument that the export from a different unit (Chennai) invalidated the exemption, stating that the fulfillment by the E.O.U itself sufficed.4. The Court dismissed the appeal, affirming the CESTAT's decision and emphasizing that the location of export, whether from Bhimli or Chennai unit, did not affect the E.O.U's entitlement to exemption. The judgment clarified that the E.O.U's compliance with export obligations under the notification was the key factor, regardless of the specific unit from which the export occurred.5. In a related appeal, Civil Appeal No. 6570 of 2004 was disposed of in line with the order passed in Civil Appeal No. 10203 of 2003, consolidating the decisions and outcomes of the cases. The Court's ruling upheld the E.O.U's fulfillment of legal obligations and entitlement to duty exemption based on export compliance, irrespective of the export unit's location.