2011 (3) TMI 1092 - AT - Central Excise

Re-export - 100% EOU - Duty free imported raw material - Final product manufactured out of the said raw material was cleared by the appellant in DTA in terms of para 9.10 (b) of Exim Policy 1997-2002 under EEFC account - Commissioner confirming duty on the ground that clearances in DTA against foreign exchange cannot be treated as export - Held that - The present proceedings are as a consequence of the passing of the earlier order confirming duty on the final product. The earlier order of the Commissioner confirming duty on the ground that clearances in DTA against foreign exchange cannot be treated as export stands set aside by the Tribunal vide its order No.A/1816-1833/WZB/05/C-III dt.28.06.05. As such the entire basis of the present impugned order is no longer available with the setting aside of the earlier order of the Commissioner.

Summary

Issues:
1. Demand of duty and penalty on a 100% EOU for not using duty-free imported raw materials in the manufacture of final products cleared for export.
2. Consideration of clearances in DTA under Exim Policy as exports leading to duty confirmation on final products.
3. Proceedings initiated against the appellant for duty confirmation on final products following earlier order by the Commissioner.
4. Setting aside of the earlier order by the Tribunal, impacting the basis of the impugned order.
5. Appeal against the impugned order confirming duty on raw materials used in the manufacture of final products cleared to DTA customers under Exim Policy.

Analysis:
1. The judgment addresses the demand of duty and penalty imposed on the appellant, a 100% EOU, for not utilizing duty-free imported raw materials in the production of final products cleared for export. The Tribunal notes the confirmation and imposition of duty amounting to Rs.4,35,45,189/- along with an equivalent penalty on the appellant.

2. The issue arises from the consideration of clearances in DTA under Exim Policy as exports, leading to the initiation of proceedings against the appellant for confirming duty on the final products. The Commissioner's order confirmed duty on the final products, which were cleared by the appellant in DTA under EEFC account, based on the premise that such clearances could not be deemed exports.

3. The present proceedings stem from the earlier order by the Commissioner confirming duty on the final products. The Tribunal is informed that the earlier order was set aside by the Tribunal, rendering the basis of the impugned order invalid. The Tribunal acknowledges that the entire foundation of the impugned order is no longer valid following the Tribunal's decision to set aside the Commissioner's earlier order.

4. The Tribunal notes the acceptance by the Revenue's representative of the position that the earlier order confirming duty on the final products has been set aside. This acknowledgment underscores the lack of basis for upholding the impugned order confirming duty on the raw materials used in the manufacture of final products cleared to DTA customers under Exim Policy.

5. Consequently, the Tribunal sets aside the impugned order and allows the appeal in favor of the appellant, providing consequential relief. The decision is made based on the finding that there are no grounds to uphold the duty confirmation on raw materials used in the production of final products cleared to DTA customers under the provisions of para 9.10 (b) of the Exim Policy.

This comprehensive analysis of the judgment encapsulates the issues involved and the detailed examination conducted by the Tribunal in arriving at its decision to set aside the impugned order and grant relief to the appellant.