2012 (12) TMI 140

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..... The facts of the case are that the applicants are a 100% Export Oriented Unit and manufacturers of fatty acids, alcohol and soap noodles. The applicants were allowed to sell goods manufactured by them in domestic tariff area up to 50% of FOB value of the exports on payment of concessional duty subject to achievement of NFEP. As the applicant has achieved the NFEP, applicants are allowed to clear the goods in DTA on payment of Central Excise duty equal to customs duty leviable. As per Notification 19/2006-Cus., dated 1-3-2006, Additional duty of customs (SAD) @ 4% ad valorem to countervail sales tax i.e. VAT/local taxes and other charges leviable on sales or purchase or transportation of like goods in India when imported into India is....

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...., it was pointed out by the audit that the SAD is not payable on supply made from EOU as per Sr.No. 1 of Notification No. 23/03 and therefore the Sion unit is not entitled to the credit of SAD paid by applicants. A show-cause notice was issued proposing to deny the CENVAT credit availed by their Sion unit in respect of SAD paid by the applicant for stock transfer. After the said show-cause notice, the applicant stopped paying SAD on stock transfer to their Sion unit. In these circumstances, the demands are not sustainable as department is having inconsistent views. He further argued on merits also that as per Notification 23/2003-C.E., dated 31-3-2003, there is an exemption for DTA clearance on specified goods produced by an EOU tm the cond....

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....ng authority has rightly held that they are liable to pay SAD and therefore applicant be asked to make the pre-deposit at this stage. 6. We have heard both sides in detail and find that in this case demand of SAD has been confirmed against the applicant on their stock transfer to their Sion unit. It is an admitted position that the fatty acid cleared by the applicant is liable for ST/VAT. Therefore, the view taken in Mozer Baer India (supra) is distinguishable as in that case the state government has given area based exemption where the factory was situated and the article was exempt from ST/VAT (claiming area based exemption.) Further we find that no sale has taken place at the appellant's unit at Taloja which is a 100% EOU and the....