2019 (9) TMI 1500 - AT - Central Excise

Appellant's Duty Liability Clarified for Goods Cleared from EOU to DTA Units /2004

The court held that the appellant was liable to pay duty for finished goods in their EOU before final debonding as the exports were made in the capacity ... Levy of duty - duty on finished goods lying in their EOU, when permission for debonding was issued on 24.04.2008, under the admitted facts and prior to the date of final debonding i.e. on 29.12.2008, the goods stood admittedly exported in view of the admitted facts before the court below - HELD THAT:- The issue is regarding the payment of duty on the goods in question, which have been exported prior to final debonding. It is not disputed that export of the goods has already taken place prior to debonding. The ld. Counsel relies on the case of M/S. FATEH GRANITES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR II [2013 (12) TMI 1686 - CESTAT NEW DELHI], wherein it has been held, if the goods were exported, refund of the duty paid on finished goods lying in stock at the time of debonding, as such stock was later on exported, hence the appellants cannot be denied refund of duty paid. Accordingly, the refund was granted to the appellant. In M/S. JUBILANT LIFE SCIENCES LIMITED VERSUS CCE, MEERUT-II [2013 (11) TMI 1213 - CESTAT NEW DELHI], this Tribunal have held that no duty is payable on finished goods, lying in stock, if goods are exported before the final debonding order. Appeal allowed - decided in favor of appellant. Issues:1. Liability to pay duty for finished goods in EOU before final debonding.2. Interpretation of Circular No. 01/2004-Cus. dated 05.01.2004.3. Applicability of duty on goods exported before final debonding.Analysis:Issue 1: Liability to pay duty for finished goods in EOU before final debondingThe main issue in this appeal was whether the appellant is liable to pay duty for the finished goods in their EOU before the final debonding. The appellant contended that the stocks of finished goods lying as on the date of the NOC were later exported before the final debonding date, and thus, there should be no demand for duty on such goods. However, the court found that the exports made by the appellant were in the capacity of being a DTA unit and not the EOU. The court emphasized that the duty liability of finished goods lying in stock before the NOC issue needed to be assessed, intimated, and deposited by the appellant, which they failed to do so. The court also highlighted that the conversion of an EOU unit into a DTA unit is equivalent to the removal of goods from the EOU to a DTA unit, citing relevant case law and Circulars.Issue 2: Interpretation of Circular No. 01/2004-Cus. dated 05.01.2004The judgment discussed the contents of Circular No. 01/2004-Cus. dated 05.01.2004, which clarified the levy of duty on goods cleared by 100% EOU to DTA units. The Circular emphasized that duty on finished goods, raw materials, and capital goods must be paid before debonding, as per the proviso to Section 3(1) of the Central Excise Act, 1944. The judgment highlighted the withdrawal of a previous circular based on the decision of the Larger Bench of the CESTAT, which clarified the applicable duty rates for goods cleared from EOU to DTA units.Issue 3: Applicability of duty on goods exported before final debondingThe judgment considered whether duty was payable on goods exported before the final debonding order. It was noted that if the goods were exported before debonding, a refund of the duty paid on finished goods lying in stock at the time of debonding should be granted. Citing relevant case law, the judgment emphasized that no duty is payable on finished goods lying in stock if goods are exported before the final debonding order. The decision in this case was influenced by previous rulings granting refunds in similar situations, leading to the setting aside of the order and allowing the appeal in favor of the appellant.