2010 (4) TMI 465 - AT - Central Excise

Tribunal grants duty refund on imported blades sold as scrap

The Tribunal allowed the appeal in favor of the appellants, finding that duty payment on imported blades sold as scrap by an EOU should be based on the ... EOU - the appellants being an EOU had imported the impugned blades for use in the machines for cutting granite logs which were exported after such cutting. He states that the blades become unusable and scraps after a number of use and these have been sold outside in the DTA as scrap and duty on the same has been paid on transaction value. He challenges the duty demanded by the Department holding that the duty should have been paid on depreciated value of the blades though the differential amount has already been paid by the appellants who are seeking refund of the same. Held that - assessee eligible for refund of such additional amount paid. Issues: Duty payment on imported blades sold as scrap by an EOU under Notification No. 53/97-Cus.Analysis:1. The appellant, an EOU, imported blades for cutting granite logs, which were later sold as scrap in the DTA after becoming unusable. The appellant challenged the duty demanded by the Department, arguing that duty should have been paid on the depreciated value of the blades, as the duty on the transaction value had already been paid when the blades were initially imported.2. The Department confirmed that the initial imports were made under Notification No. 53/97-Cus., which governs the scrap arising from imported blades. The duty payable on such scrap is determined under Section 3 of the Central Excise Act, 1944, with reference to the transaction value under Section 4 of the Act.3. The Tribunal, after considering the arguments from both sides, found that Condition No. 7 of the said notification applies to the clearance of rejects, waste, and scrap material in an EOU. Under this condition, duty is payable based on the transaction value under Section 4 of the Act. Since the appellants had already paid duty on the transaction value and subsequently paid the differential amount at the insistence of the Department, they were eligible for a refund of the additional amount paid.4. Consequently, the Tribunal set aside the impugned orders passed by the lower authorities and allowed the appeal in favor of the appellants, granting them the consequential benefit of a refund for the additional duty paid. The judgment was dictated and pronounced in open court by Dr. Chittaranjan Satapathy, Member (T) of the Appellate Tribunal CESTAT CHENNAI.