Appellant entitled to Customs duty refund for raw material under EOU status.

The appellant claimed a refund for Customs duty paid on raw material under EOU status for de-bonding. Lower authorities rejected the claim citing absence of provisions under Section 11B of Central Excise Act and Section 27 of Customs Act. The appellant argued the duty paid on raw material used in the final product, subsequently exported before de-bonding, should be refundable. Tribunal judgment supported the argument. Review found duty paid on raw material was exempt from Customs duty, making it refundable. Appellant entitled to refund, directed for processing under Section 27 of Customs Act. Impugned order set aside, appeal allowed.

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Issues:
Refund claim for Customs duty paid on raw material under EOU status for de-bonding, rejection of refund claim by lower authorities, applicability of provisions under Section 11B of Central Excise Act and Section 27 of Customs Act, time bar for refund under Section 26A of Customs Act.

Analysis:
The appellant claimed a refund for the Customs duty paid on raw material under the EOU status for de-bonding. The lower authorities rejected the refund claim citing the absence of provisions for such refunds under Section 11B of the Central Excise Act, 1944, or Section 27 of the Customs Act, 1962. The appellant argued that the raw material on which duty was paid was used in the final product, which was subsequently exported before the final de-bonding. The appellant contended that since the raw material was not leviable with Customs duty before de-bonding, the duty paid should be refundable. Reference was made to a Tribunal judgment to support this argument. Additionally, the lower authorities claimed the refund was time-barred under Section 26A of the Customs Act, asserting a six-month limitation period, which the appellant argued was not applicable to the present case.

Upon review of submissions and records, it was found that the appellant paid Customs duty on the raw material after obtaining initial de-bonding permission but before the final de-bonding under the EOU scheme. Despite this, the raw material used in the export goods during the EOU status was exempt from Customs duty as per Notification No. 52/2003-Cus. When the final product was exported before de-bonding, the raw material used should not have incurred Customs duty. Therefore, the duty paid on the raw material was deemed refundable. The appellant was held entitled to the refund, and the Sanctioning Authority was directed to process the claim under Section 27 of the Customs Act, 1962. Consequently, the impugned order was set aside, and the appeal was allowed.

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