https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770131 https://www.taxtmi.com/caselaws?id=770131 Levy of 4% Special Additional Duty (SAD) under Notification No. 23/2003-CE and Section 3(5) of the Customs Tariff Act, 1975 - clearances made by a 100% Export Oriented Unit (EOU) to its sister units located in the Domestic Tariff Area (DTA) - leviability of duty on destruction of expired tablets/ raw materials/remnant samples in the factory premises. Levy of 4% Special Additional Duty (SAD) under Notification No. 23/2003-CE and Section 3(5) of the Customs Tariff Act, 1975 - clearances made by a 100% Export Oriented Unit (EOU) to its sister units located in the Domestic Tariff Area (DTA) - HELD THAT:- In the case of Moser Baer India Ltd [2009 (6) TMI 48 - CESTAT, NEW DELHI (LB)], one of the issues, inter alia, was of imposition of SAD on clearances from 100% E.O.U. The value included goods cleared in DTA by E.O.U and exempted from sales tax/ VAT. Hon'ble Larger Bench concluded vide para 1, 7.1, 7.3, 7.4, 7.6 and para 8, 12-13 that if an article on which sales tax/VAT or other local taxes are leviable and same is notified by the Central Government by notification issued under Section 3(5) of the Customs Tariff Act, 1975 as attracting SAD @ 4% ad valorem, then SAD would be chargeable on import of the article, even if some State Governments give exemption overall or for some area of a particular state and if that article has been fully exempted from payment of sales tax/VAT. Therefore, we conclude that on merits if supplies are made by 100%EOU to specified exempt area, even if such area is not leviable to VAT/sales tax, it would still be chargeable to 4% SAD. Even the learned counsel had fairly conceded that the decision of the Larger Bench of the Tribunal in the case of Moser Baer India Ltd is against them. Leviability of duty on destruction of expired tablets/ raw materials/remnant samples in the factory premises - HELD THAT:- In Sun pharmaceutical Ltd vs. Commissioner of Central Excise and Customs, Daman [2008 (4) TMI 636 - CESTAT, AHMEDABAD], it has been held that for expired medicines, if despite waiting for long for permission to destroy the goods, no permission is received and the destruction is carried out by party on its own in their premises, then the demand of duty cannot be sustained. It is not coming out from the records in this case as to whether permission was sought for by the appellant and still the party had destroyed the goods circumventing requirement of grant of some reasonable period to the department or not. If reasonable time was not allowed by the party, the duty shall be demandable otherwise not. On the issue of destruction of goods, further details are warranted. These aspects need to be looked into by the adjudicating authority with all the relevant details along with limitation issue. Invocation of extended period of limitation - HELD THAT:- Regarding filing of regular returns, it is observed that they have not disclosed availment of benefit at Sr. 1 of N/N. 23/2003 and have indicated only Sr. 2 of the above notification. Therefore, the appellant's argument on invocation of extended period fails. Conclusion - i) If supplies are made by 100%EOU to specified exempt area, even if such area is not leviable to VAT/sales tax, it would still be chargeable to 4% SAD. ii) Regarding duty on destruction of expired tablets/ raw materials/remnant samples in the factory premises, reasonable time was not allowed by the party, the duty shall be demandable otherwise not. On the issue of destruction of goods, further details are warranted. These aspects need to be looked into by the adjudicating authority with all the relevant details along with limitation issue. iii) The appellant's argument on invocation of extended period fails. Appeal partly allowed. Case-Laws Central Excise Mon, 05 May 2025 00:00:00 +0530