2023 (4) TMI 211 - AT - Central Excise

EOU's Appeal Allowed: Exemption Granted for Manufacturing & Exporting Excisable Goods

M/s. DCM Hyundai Ltd. Versus Commissioner of GST & Central Excise, Chennai

The appellant, a 100% EOU, sought permission to manufacture and export excisable goods. The Department alleged a contravention of the Foreign Trade ... 100% EOU - disallowance of concessional rate of duty in regard to tipping bodies - benefit of the notification dated 31.03.2003 dis-allowed alleging that the goods cleared to DTA are not similar to the goods exported to the appellant as EOU - whether the tipper bodies cleared by the appellant into DTA, who is 100% EOU, are eligible for the benefit of concessional rate of duty under Notification No.23/2003 CE? HELD THAT:- It can be seen that the appellant has been permitted to clear/sell containers of iron/steel/aluminum/stainless steel/etc. (other than Marine Freight Containers). The allegation of the Department is that the appellant have exported only Marine Freight Containers and Special Purpose Containers. The tipper body and Steel Structures cleared by them are not similar to the goods exported as required under 6.8 of the Foreign Trade Policy - In the case in hand, the product in dispute is ‘Tipping Body’. The authorities below have decided that it is different from Marine Freight Containers and Open Top Containers. The words used in para 6.8 (a) of FTP is that the EOU unit may sell products in DTA which are “similar” to the goods that are exported by the unit. The word used is similar and not identical. It can be seen that the open top containers exported by the appellant is similar to the tipper body used for transportation. It is not necessary that the goods cleared into DTA have to be identical to the goods exported by the EOU. Further, permission has been granted by the MEPZ to clear containers which are similar - the denial of the benefit of the notification is not justified. The impugned order demanding differential duty is set aside. Appeal allowed. Issues:The issues involved in the judgment are: 1. Whether the tipper bodies cleared by the appellant, a 100% EOU, are eligible for the benefit of concessional rate of duty under Notification No.23/2003 CE. Comprehensive Details:1. The appellant, a 100% EOU, sought permission to manufacture and export excisable goods. The Department alleged a contravention of the Foreign Trade Policy by not clearing to DTA products similar to those exported. Show Cause Notices were issued, leading to demand of differential duty. The Original Authority confirmed the demand, which was challenged by the appellant in subsequent appeals.2. The appellant argued that the tipper body cleared to DTA is similar to containers exported by them as an EOU. They claimed exemption under Notification No.23/2003 CE based on permissions granted by the Development Commissioner.3. The appellant complied with EOU conditions and was permitted to exit from EOU. However, a Show Cause Notice was issued post-exit, proposing to disallow the benefit of the notification dated 31.03.2003.4. The counsel contended that the tipper body is a type of container used for transportation, similar to open top containers exported by the appellant. The manufacturing processes for both are the same, supporting the argument with a Tribunal decision.5. The counsel argued that issuing a Show Cause Notice post No Due Certificate under the Final Exit Order is without jurisdiction. The authorities' view was deemed contrary to EOU licensing norms.6. The counsel further argued that once the Development Commissioner grants permission for DTA clearance, Central Excise authorities cannot question its validity. A Tribunal decision was cited in support.7. The Department contended that tipper bodies are not similar to Marine Freight Containers exported by the appellant.8. After hearing both sides and examining the records, the key issue was identified as whether the tipper bodies cleared by the appellant, a 100% EOU, are eligible for the benefit of concessional rate of duty under Notification No.23/2003 CE.9. The permission granted to the appellant for DTA sales included various products, excluding Marine Freight Containers. The Department alleged that the goods cleared to DTA were not similar to those exported, as required under the Foreign Trade Policy.10. The relevant portion of the Foreign Trade Policy was cited, emphasizing the requirement for EOU units to sell products in DTA that are 'similar' to the exported goods, not necessarily identical.11. A previous Tribunal case was referenced to clarify the definition of 'similar goods' for exemption under Notification 23/2003-C.E. The decision highlighted the importance of common parlance or dictionary meaning in such cases.12. The Tribunal's analysis in the referenced case concluded that goods cleared in DTA need to have like characteristics and functions as the exported goods, not necessarily be identical. The denial of the benefit of the notification was deemed unjustified.13. Ultimately, the impugned order demanding differential duty was set aside, and the appeal was allowed with consequential relief, if any, as per law.14. The judgment was pronounced in open court on 03.04.2023.