2016 (10) TMI 75 - AT - Customs

100% EOU - demand of Additional Customs duty of Rs. 2/- per liter imposed by Section 116 of the Finance Act 1999 - High Speed Diesel Oil - exemption Notification No. 52/2003-Cus dated 31.3.2003 - whether appellant being 100% EOU will be liable to pay ADD as demanded? - Held that - the decision in the case of PARAS FAB INTERNATIONAL Versus COMMISSIONER OF C. EX. KANDLA 2010 (6) TMI 184 - CESTAT NEW DELHI has been relied upon where it was held that the entire premises of 100% EOU is a bonded warehouse. Neither the scheme of the Act nor the provisions contained in the Manual require filing of ex-bond bills of entry or payment of duty before taking the imported goods for manufacturing in bond nor there is any provision to treat such goods as deemed to have been removed for the purpose of Customs Act 1962. The Notification No. 59/99 dated 11.5.1999 exempts high speed diesel oil falling under heading No. 27.10 of the First Schedule to the Customs Tariff Act 1975 (51 of 1976) when imported into India from so much of the additional duty leviable thereon under sub-section (1) of section 3 of the said Customs Tariff Act as is equivalent to the additional duty of excise leviable on high speed diesel oil under section 133 read with Second Schedule of the Finance Act 1999 (27 of 1999). - the High Speed Diesel is exempted from payment of the additional duty levied under Section 116 of the Finance Act 1999. Appeal disposed off - decided in favor of appellant.

Summary

Issues:
- Demand of duty on High Speed Diesel imported for captive power plant
- Exemption under Notification No. 52/2003-Cus dated 31.3.2003
- Interpretation of Notification No. 59/99 dated 11.5.1999
- Benefit of exemption for 100% EOU
- Applicability of Tribunal decisions in Paras Fab International and I.C. Textiles Ltd.

Analysis:
The appeal pertains to M/s Eurotex Industries & Exports Ltd., an EOU, challenging the duty demand on High Speed Diesel imported for their captive power plant. The dispute revolves around the exemption under Notification No. 52/2003-Cus dated 31.3.2003, which does not specifically exempt the additional duty of Rs. 2/- per liter imposed by Section 116 of the Finance Act, 1999. The appellant contends that Notification No. 59/99 dated 11.5.1999 exempts the import of High Speed Diesel, citing the relevant provisions. The lower authorities denied the exemption, leading to the appeal before the Tribunal.

The appellant's counsel argued that the issue aligns with the Larger Bench decision in Paras Fab International and emphasized their status as a 100% EOU, relying on the observations in the said order. Additionally, reference was made to the Tribunal's decision in the case of I.C. Textiles Ltd. The Authorized Representative supported the impugned order.

Upon reviewing the submissions, the Tribunal examined the provisions related to warehousing and the EOU Scheme. Citing the Paras Fab International decision, it highlighted the requirements for 100% EOU premises as a bonded warehouse and the absence of duty payment obligations for goods used in manufacturing within the bonded premises. The Tribunal also referenced the I.C. Textiles case, emphasizing the exemption for goods moved into a 100% EOU. Furthermore, the Tribunal reiterated the exemption under Notification No. 59/99 for High Speed Diesel, exempting it from the additional duty levied under Section 116 of the Finance Act, 1999.

Consequently, the Tribunal concluded that the impugned order was unsustainable and allowed the appeal in favor of the appellant, emphasizing the exemption provisions and the status of the appellant as a 100% EOU. The judgment was pronounced on 15.09.2016.