2016 (9) TMI 1117 - AT - Customs

Tribunal Upholds Decision on Inter-Unit Goods Transfer Under EOU Scheme

Commissioner of Central Excise Versus M/s Virlon Textile Mills Ltd. Shri Adarsh Veer Jain

The Tribunal upheld the Commissioner's decision in a case concerning inter-unit transfer of goods under the EOU scheme. The appellant's actions were found ... Demand of duty forgone on imported material - exemption availed under Notification No. 53/97-Cus dated 03.06.1997 - EOU engaged in manufacture of Polyester Texturised/Dyed Yarn - Partially Oriented Yarn - The entire consignment of POY imported by them was sold to M/s. Arihant Synthetics Ltd., without any processing - inter-unit transfer of goods - is the transfer of goods to another unit results to violation of conditions stipulated in Notification No. 53/97-Cus dated 03.06.1997 and is demand of duty forgone justified? - Held that: - it does not require existence of any valid reason for transfer of goods to another EOU. No restriction imposed in respect of supply from one EOU to another such EOU. The dates and events were examined by the Commissioner and it was found that these events would constitute a valid reason in terms of para 6.16 of the EXIM Policy - demand of duty not justified. Earlier the Appeal No. C/771/05 was filed in form E.A-5. However, the Asst. Register vide letter dated 24.06.2005 informed the appellant that appeal needs to be filed in C.A-5 instead of E.A.5. Accordingly, an appeal in the form C.A-5 was filed. The earlier appeal filed before this Tribunal in Appeal No. C/771/05 therefore becomes infructuous and duplicate. Appeal disposed off - decided against Revenue. Issues:Inter-unit transfer of goods under EOU scheme, compliance with conditions of exemption notification, fulfillment of export and other obligations, validity of reasons for transfer of material to another EOU.Inter-unit transfer of goods under EOU scheme:The appellant imported Partially Oriented Yarn (POY) under an exemption notification. The Revenue alleged that the material was not used for production and was cleared to another EOU without processing, violating the conditions of the exemption. The appellant argued that the inter-unit transfer was done under valid reasons as per the EXIM Policy 2002-2007. The Commissioner accepted the appellant's defense, stating they had valid reasons for the transfer under para 6.16 of the Policy. The Tribunal noted that the objection of the Revenue lacked merit, as the Policy did not require a valid reason for transfer between EOUs, as clarified in Circular No. 91/2002-Cus. The Tribunal upheld the Commissioner's decision, emphasizing that the events constituted valid reasons for the transfer, as per para 6.16 of the Policy.Compliance with conditions of exemption notification:The Revenue contended that the appellant failed to fulfill export and other obligations under the exemption notification. The appellant argued that they complied with the conditions stipulated in the letter of permission given to them and had valid reasons for the inter-unit transfer. The Tribunal examined the events and dates, finding that the appellant's actions constituted valid reasons for the transfer under para 6.16 of the Policy. The Tribunal rejected the Revenue's appeal, affirming the Commissioner's decision to drop the proceedings.Fulfillment of export and other obligations:The Revenue alleged that the appellant did not utilize duty-free POY in finished goods, failing to meet export and other obligations. The appellant defended their actions, stating that the inter-unit transfer was justified under the Policy. The Tribunal reviewed the facts and events, concluding that the appellant had valid reasons for the transfer as per para 6.16 of the Policy. The Tribunal dismissed the Revenue's appeals, supporting the Commissioner's decision.Validity of reasons for transfer of material to another EOU:The central issue revolved around the validity of reasons for transferring material to another EOU. The appellant argued that the transfer was justified under para 6.16 of the EXIM Policy. The Tribunal analyzed the events and dates, finding that the appellant had valid reasons for the transfer, as explained in Circular No. 91/2002-Cus. The Tribunal upheld the Commissioner's decision, stating that the inter-unit transfer constituted valid reasons as per the Policy, and rejected the Revenue's appeals.---