2018 (2) TMI 710 - AT - Central Excise

Tribunal reclassifies imported items, favors appellant in duty rate dispute.

Premium Tools Pvt. Ltd. Versus Commissioner of Central Excise & Customs, Nashik

The Tribunal overturned the adjudicating Commissioner's classification of certain imported items as 'raw materials' or 'consumables' for concessional duty ... Eligibility of concessional rate of duty on domestic clearances - whether ‘barium chloride’ and ‘corundum sand’ are raw materials and not consumables? - similar issue decided in appellant own case Premium Tools Pvt Ltd, Sham Chandrakant Keluskar Versus Commissioner of Central Excise & Customs, Nasik [2017 (1) TMI 290 - CESTAT MUMBAI], where it was held that The context of the exemption afforded to materials imported by ‘export oriented units’ and the condition stipulated for eligibility to excise duties, instead of half of the aggregate of duties of customs, that ‘raw materials’ be domestically procured does not permit the latitude of treating ‘consumables’ as ‘raw materials.’ - appeal allowed - decided in favor of appellant. Issues:Interpretation of 'raw materials' and 'consumables' for concessional rate of duty on domestic clearances.Analysis:The appeal was filed against an order-in-appeal dated 26/02/2014. Both parties agreed that the issue had been previously considered by the Tribunal in the appellant's own case. The core dispute was whether certain imported items like 'barium chloride', 'corundum sand', 'anti-corrosion oil', and 'stamping ink' were to be classified as 'raw materials' or 'consumables'. The adjudicating Commissioner had categorized the first two as 'raw materials' and the latter two as 'consumables', making the appellant ineligible for the concessional duty rate on domestic clearances.The Tribunal referred to a previous decision in a similar case and emphasized the distinction between 'raw materials' and 'consumables'. The judgment highlighted that 'consumables' are materials used as inputs in the manufacturing process but are not identifiable in the final product as they get consumed during production. This distinction was crucial in determining the eligibility for concessional duty rates. The Tribunal found that the adjudicating Commissioner had erred in treating 'consumables' as 'raw materials', leading to the conclusion that the duties paid by the appellant on domestic clearances were legal and proper.Based on the earlier decision and the interpretation of 'raw materials' and 'consumables', the Tribunal found no merit in the impugned order and set it aside. Consequently, the appeal filed by the appellant was allowed. The judgment was dictated and pronounced in the open court, affirming the decision in favor of the appellant.