2024 (2) TMI 496 - AT - Central Excise

Special additional duty cannot be levied on DTA clearance from 100% EOU for stock transfers to own units

CESTAT Ahmedabad ruled that special additional duty (SAD) cannot be levied on DTA clearance from 100% EOU when goods are cleared as stock transfer to ... Levy of special additional duty (SAD) - DTA clearance from 100% EOU when the goods were cleared as a stock transfer to their own unit - case of the department is that since the appellant have cleared their goods to their own unit, they have not paid the VAT/Sales Tax which was construed by the department as exempted from VAT/Sales Tax - Applicability of exemption N/N. 23/2003-CE dated 31.03.2003 (Sr. No. 1) - HELD THAT:- The Tribunal in various decisions has taken a consistent view that the stock transfer from EOU to their other unit is not falling under category of sale. The said supplier will not be treated as exempted from payment of VAT/ Service Tax. Therefore, there is no violation of condition of Notification 23/2003-CE - reliance can be placed in Micro Inks [2014 (2) TMI 207 - CESTAT AHMEDABAD], VVF Ltd. [2014 (2) TMI 922 - CESTAT MUMBAI] and Sti Industries [2014 (12) TMI 1130 - CESTAT AHMEDABAD]. The demand of SAD confirmed by the adjudicating authority is not sustainable - Hence, the impugned order is set aside - Appeals are allowed. Issues involved:The issue involved in the present case is whether the appellant is liable to pay special additional duty in case of DTA clearance from their 100% EOU when the goods were cleared as a stock transfer to their own unit.Details of the Judgment:Issue 1: Applicability of Notification No. 23/2003-CEThe department contended that since the appellant cleared goods to their own unit without paying VAT/Sales Tax, the goods were considered exempted, making the appellant ineligible for exemption under Notification No. 23/2003-CE. However, the appellant argued that the goods were not exempted from VAT/Sales Tax as they were cleared as stock transfer, not involving sales, and thus, the appellant was entitled to the exemption.Judgment: The Tribunal held that the transaction from EOU to their own unit was a stock transfer, not a sale, and therefore not subject to VAT/Sales Tax. The denial of exemption under Notification No. 23/2003-CE was deemed incorrect and illegal. Citing previous judgments, the Tribunal concluded that the appellant was entitled to the exemption as the goods were not exempted from VAT/Sales Tax.Key Legal Points:- The nature of the transaction as a stock transfer, not involving sales, exempted it from VAT/Sales Tax.- The appellant was entitled to the exemption under Notification No. 23/2003-CE as the goods were not exempted from VAT/Sales Tax.- Previous judgments supported the view that stock transfers from EOU to their own unit do not attract VAT/Sales Tax and are eligible for exemption.This judgment highlights the importance of understanding the nature of transactions and the applicability of tax exemptions based on legal interpretations and precedents.