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2023 (6) TMI 1106 - AT - Central ExciseConversion to DTA from EOU - Alleged incorrect payment of duty on semi-finished goods and finished goods at the time of de-bonding into a DTA unit - failure to adopt Rule 14 of Customs Act, 1962 - whether the assesse is liable to pay the demand of differential duty on the semi-finished goods and finished goods at the time of de-bonding? HELD THAT:- The issue with regard to the liability to pay duty on semi-finished goods was considered by the Tribunal in the case of Jubilant Life Sciences Ltd. [2018 (5) TMI 466 - CESTAT ALLAHABAD]. The Tribunal observed that the duty demand is on the goods that had not come into existence (that have not completed the manufacturing stages) and therefore not sustainable. Moreover, these goods have been further processed into finished goods and the assesse has exported these goods - In the case of Tirumala Seung Han Textiles Ltd. Vs. CCE (A) Hyderabad [2008 (9) TMI 252 - CESTAT BANGALORE], the Tribunal set aside the demand observing that there is no mention of semi-finished goods in Para 6.18 of the Foreign Trade Policy and the demand for duty on such goods is not sustainable. The duty demand on finished goods was defended by the learned Counsel by submitting that the goods having been exported the demand cannot sustain. It is an admitted fact, in the Show Cause Notice as well as the OIO that these goods have been exported. At the time of such export assessee has paid duty as per provisions of Section 3(1) of the Central Excise Act, 1944 on the export clearances - The Tribunal in the case of M/S BHATI AND COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE [2019 (9) TMI 1500 - CESTAT NEW DELHI] had set aside the demand of duty raised invoking proviso to Section 3(1) of the Central Excise Act without availment of Notification No. 23/2003. It was observed therein that the finished goods having been exported the duty demand cannot sustain. In the present case, there are no grounds to take a different view - at the time of de-bonding, the assesse has to pay duty as per Section 3(1) of Central Excise Act. The appellant has paid duty on the goods for the second time at the time of export as per Section 3(1) of Central Excise Act, 1944. The goods having been exported we hold that the demand cannot sustain. The duty demand raised on the semi-finished goods and finished goods cannot be sustained for the reason that the goods have already been exported and that too on payment of duty under Section 3(1) of Central Excise Act, 1944. As the differential duty demand by applying proviso to Section 3(1) without availing the benefit of notification has been set aside, there are no reason to uphold the disallowance of credit. The appellant is eligible to avail credit of duty paid on finished goods and semi-finished goods. Appeal allowed in part.
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