2025 (6) TMI 551 - AT - Customs

100 % EOU - seeking refund of Anti Dumping Duty (ADD) paid under protest - HELD THAT - The identical issue came up for consideration before a Co-Ordinate Bench of this Tribunal in relation to the remission of duty owing to same fire by accident in appellant s own case M/S. PIRAMAL HEALTHCARE LIMITED (100% EOU) VERSUS THE COMMISSIONER OF CENTRAL EXCISE CHENNAI 2023 (12) TMI 859 - CESTAT CHENNAI where it was held that The goods imported were destroyed in fire and therefore there is no requirement to look into the fulfilment of the conditions of Notification No.52/2003 dated 31.03.2003. We find that the appellant is eligible for remission of duty. Having been paid under protest the appellant is eligible for refund. Conclusion - i) The appellant is entitled to refund of ADD paid on goods destroyed by fire within the EOU. ii) Interest on delayed payment of ADD is payable. The appeal is allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal include:

(a) Whether the appellant, a 100% Export Oriented Unit (EOU), is eligible for remission or refund of Anti-Dumping Duty (ADD) paid on imported goods that were subsequently destroyed in a fire accident within the EOU premises;

(b) Whether the conditions stipulated under Notification No.52/2003-Cus dated 31.03.2003 and Notification No.22/2003-C.Ex dated 31.03.2003, which grant exemption benefits to EOUs, are applicable in the case of goods destroyed by accident;

(c) Whether the appellant is liable to pay interest on delayed payment of ADD and whether penalty under Section 117 of the Customs Act, 1962 read with Section 72 is justified;

(d) The applicability of Section 9A(2A) of the Customs Tariff Act, 1975, pre- and post-28.03.2021, regarding the levy of anti-dumping duty on goods imported by 100% EOUs;

(e) The relevance of Notification No.96/2007-Cus dated 29.08.2007 imposing ADD and Notification No.5/1994-Cus dated 18.11.1994 in the context of exemption and levy of ADD on EOUs;

(f) The impact of insurance reimbursement of customs duty on the refund claim for ADD;

(g) The correctness of the orders passed by the original authority and first appellate authority in rejecting the refund claim and imposing interest and penalty.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a) and (b): Eligibility of Remission or Refund of ADD Paid on Goods Destroyed by Fire within 100% EOU

Relevant legal framework and precedents: The appellant relied on Notification No.52/2003-Cus dated 31.03.2003 and Notification No.22/2003-C.Ex dated 31.03.2003, which provide exemption benefits to EOUs for procurement of raw materials and capital goods. The department challenged the exemption on the ground that the conditions of the notification were not fulfilled due to destruction of goods by fire. The Tribunal considered Section 9A(2A) of the Customs Tariff Act, 1975, which exempts 100% EOUs from anti-dumping duty unless explicitly made applicable or if goods are cleared into Domestic Tariff Area (DTA).

Court's interpretation and reasoning: The Tribunal referred to a recent Co-ordinate Bench order in the appellant's own case, which held that since the goods were destroyed by fire within the EOU and not cleared into DTA or used for manufacture of goods cleared into DTA, the anti-dumping duty notification was not applicable. The conditions of Notification No.52/2003-Cus were therefore not relevant for denying exemption. The Tribunal emphasized that the destruction of goods by accident does not disentitle the appellant from remission or refund of ADD paid under protest.

Key evidence and findings: The appellant produced a letter dated 27.04.2011 showing payment of ADD under protest and insurance reimbursement of customs duty (excluding ADD). The goods in question were imported under the exemption notification and destroyed in a fire accident on 09.07.2010.

Application of law to facts: Since the goods were not cleared into DTA nor used for manufacture of goods cleared into DTA, and the anti-dumping duty notification did not explicitly apply to EOUs, the ADD was not leviable. The destruction by fire negated the applicability of conditions requiring fulfillment under Notification No.52/2003-Cus. The appellant was thus entitled to refund of ADD paid under protest.

Treatment of competing arguments: The department argued non-fulfillment of notification conditions and relied on Notification No.5/1994-Cus, which also requires clearance into DTA for ADD applicability. The Tribunal rejected this, noting that since goods were destroyed and not cleared, the exemption stands. The Tribunal followed the precedent of the Co-ordinate Bench that had decided the identical issue in appellant's favor.

Conclusions: The appellant is eligible for remission/refund of ADD paid on goods destroyed by fire within the EOU premises, as the anti-dumping duty notification does not apply to such goods under the statutory framework.

Issue (c): Liability for Interest and Penalty on Delayed Payment of ADD

Relevant legal framework: Section 117 of the Customs Act, 1962 read with Section 72 provides for penalty on delayed payment of customs duty. Interest is also leviable on delayed payments.

Court's interpretation and reasoning: The original authority imposed penalty and interest on delayed payment of ADD. The first appellate authority upheld the interest demand but set aside the penalty. The Tribunal did not disturb the interest liability but set aside the penalty, aligning with the first appellate authority's view.

Key evidence and findings: The appellant had paid ADD under protest, and delay in payment was established. However, the penalty was considered excessive or unjustified given the circumstances of the case.

Application of law to facts: Interest on delayed payment was rightly imposed as per law. Penalty, being a punitive measure, was not warranted considering the appellant's bona fide protest and insurance reimbursement of customs duty.

Treatment of competing arguments: The department sought penalty and interest; the appellant contested penalty. The Tribunal balanced the equities and legal provisions.

Conclusions: Interest on delayed payment of ADD is payable; penalty under Section 117 is not justified and is set aside.

Issue (d) and (e): Applicability of Section 9A(2A) of Customs Tariff Act and Notifications Imposing ADD

Relevant legal framework: Section 9A(2A) exempts 100% EOUs and SEZ units from ADD unless specifically made applicable or goods are cleared into DTA. Notification No.96/2007-Cus imposes ADD on goods but does not explicitly apply to EOUs. Notification No.5/1994-Cus provides exemption conditions linked to clearance into DTA.

Court's interpretation and reasoning: The Tribunal noted that the ADD notification did not specifically make ADD applicable to EOUs. Since the goods were destroyed and not cleared into DTA or used for manufacture of goods cleared into DTA, ADD could not be levied. The statutory exemption under Section 9A(2A) is clear and unambiguous.

Key evidence and findings: The notifications and statutory provisions were examined in detail. The destruction of goods precluded clearance or use in DTA.

Application of law to facts: The statutory exemption and notification framework exempted the appellant from ADD liability on goods destroyed within EOU.

Treatment of competing arguments: The department's reliance on Notification No.5/1994-Cus was countered by the Tribunal's interpretation that the exemption remains valid absent clearance into DTA.

Conclusions: ADD is not leviable on goods imported by 100% EOU destroyed by fire within the unit, as per Section 9A(2A) and relevant notifications.

Issue (f): Impact of Insurance Reimbursement on Refund Claim

Relevant legal framework: The appellant received insurance reimbursement for customs duty paid but not for ADD. The refund claim was thus restricted to ADD paid under protest.

Court's interpretation and reasoning: The Tribunal accepted the limitation of claim to ADD, recognizing that customs duty was reimbursed by insurance and hence not claimed.

Key evidence and findings: Letter dated 27.04.2011 and insurance correspondence supported the appellant's position.

Application of law to facts: Refund claim was appropriately limited to ADD, consistent with reimbursement received.

Treatment of competing arguments: No significant dispute on this point.

Conclusions: Refund claim restricted to ADD paid under protest is valid.

Issue (g): Correctness of Orders of Lower Authorities

Court's interpretation and reasoning: The original authority rejected refund and imposed penalty and interest. The first appellate authority upheld interest but set aside penalty. The Tribunal, following a Co-ordinate Bench decision, allowed refund of ADD and set aside penalty, confirming interest liability.

Application of law to facts: The Tribunal found the lower authorities erred in denying refund and imposing penalty.

Conclusions: The impugned orders rejecting refund and imposing penalty are set aside; interest on delayed payment is upheld.

3. SIGNIFICANT HOLDINGS

"The goods imported were destroyed in fire and therefore, there is no requirement to look into the fulfilment of the conditions of Notification No.52/2003 dated 31.03.2003. We find that the appellant is eligible for remission of duty. Having been paid under protest, the appellant is eligible for refund."

"The above provision of law as it stood prior to 28.03.2021, as well as after the said date, provides that the anti-dumping duty shall not apply to articles imported by 100% EOU or a unit in a Special Economic Zone, unless it is specifically made applicable in such notification."

"The goods having been destroyed in fire, there is no occasion of the goods cleared as such into DTA or used in the manufacture of finished products for clearance into DTA."

Core principles established include:

- Anti-dumping duty notifications and statutory provisions exempt 100% EOUs from ADD unless explicitly made applicable or goods are cleared into DTA.

- Destruction of imported goods within EOU premises by accident negates the applicability of conditions for exemption withdrawal.

- Refund of ADD paid under protest is permissible where exemption conditions are met or where goods are destroyed before clearance.

- Interest on delayed payment of duty is payable; penalty under Section 117 is discretionary and not warranted in bona fide cases.

Final determinations:

- The appellant is entitled to refund of ADD paid on goods destroyed by fire within the EOU.

- Interest on delayed payment of ADD is payable.

- Penalty imposed under Section 117 is set aside.