EOU de-bonding duty: concessional EPCG benefit applies without separate exemption, and stock duty is pegged to final de-bonding date.

Where an EOU clears capital goods and spares on de-bonding under a valid EPCG licence, the applicable policy and CBEC circulars allow concessional duty to be worked out by reference to the effective customs duty on like imported goods, and no separate exemption notification is required. Duty on consumables, packing materials, finished goods and waste is to be computed with reference to the date of final de-bonding, and stock duty paid on that basis was treated as correctly determined. The Commissioner (Appeals) relief was sustained and the Revenue challenge failed.

---

---

Issues: (i) whether capital goods and spares cleared from an Export Oriented Unit on de-bonding under an Export Promotion Capital Goods licence could be subjected to concessional duty without a separate exemption notification; and (ii) whether duty on consumables, packing materials, finished goods and waste was to be computed with reference to the date of final de-bonding.

Issue (i): Whether capital goods and spares cleared from an Export Oriented Unit on de-bonding under an Export Promotion Capital Goods licence could be subjected to concessional duty without a separate exemption notification.

Analysis: The clearance was from an EOU that had obtained EPCG licence. The Policy circular dated 13.5.2005, read with the CBEC circular dated 15.9.1994, clarified that goods cleared from an EOU under the EPCG scheme would attract central excise duty computed on the basis of the effective customs duty leviable on like imported goods after applying the relevant end-use based notification. On that basis, no separate exemption notification was required for granting the concessional benefit.

Conclusion: The concessional duty benefit on capital goods and spares was upheld in favour of the assessee.

Issue (ii): Whether duty on consumables, packing materials, finished goods and waste was to be computed with reference to the date of final de-bonding.

Analysis: The liability on stock was held to arise at the stage of final de-bonding, and the duty already paid by the assessee on the stock lying as on that date was treated as correctly determined. The benefit of Notification No. 23/2003-CE dated 31.3.2003 was also applied to the DTA clearance of yarn on the relevant stock position, and the calculation of duty on consumables and packing materials was accepted on the same footing.

Conclusion: The duty computation based on the date of final de-bonding was upheld in favour of the assessee.

Final Conclusion: The Revenue's challenge to the Commissioner (Appeals)' order failed, and the assessee's relief on both duty-related issues was sustained.

Ratio Decidendi: Where an EOU clears goods on de-bonding under a valid EPCG licence, concessional duty may be granted on the basis of the applicable policy clarification without a separate exemption notification, and duty on stock is to be determined with reference to the date of final de-bonding.

---