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Commissioner of Central Excise Versus M/s Virlon Textile Mills Ltd. Shri Adarsh Veer Jain

2016 (9) TMI 1117 - CESTAT MUMBAI

Demand of duty forgone on imported material - exemption availed under Notification No. 53/97-Cus dated 03.06.1997 - EOU engaged in manufacture of Polyester Texturised/Dyed Yarn - Partially Oriented Yarn - The entire consignment of POY imported by them was sold to M/s. Arihant Synthetics Ltd., without any processing - inter-unit transfer of goods - is the transfer of goods to another unit results to violation of conditions stipulated in Notification No. 53/97-Cus dated 03.06.1997 and is demand of .....

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ter dated 24.06.2005 informed the appellant that appeal needs to be filed in C.A-5 instead of E.A.5. Accordingly, an appeal in the form C.A-5 was filed. The earlier appeal filed before this Tribunal in Appeal No. C/771/05 therefore becomes infructuous and duplicate. - Appeal disposed off - decided against Revenue. - Appeal No. C/771 & 801/05 - A/90541-90542/16/CB - Dated:- 9-9-2016 - Mr. M.V. Ravindran, Member (Judicial) And Mr. Raju, Member (Technical) Shri Ahibaran, Addl. Commr (AR) for th .....

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. The said material was entered in the Bond Register. Subsequently on the strength of CT-3 certificate dated 10.07.2002 received from another EOU namely M/s. Arihant Synthetics Ltd. The entire consignment of POY imported by them was sold to M/s. Arihant Synthetics Ltd., without any processing. The Revenue demanded the duty forgone on the imported material as the material was not used for the production and the assessee cleared the same as such to M/s. Arihant Synthetics Ltd. It was alleged that .....

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Aggrieved by such order, Revenue is in appeal before this Tribunal. 2. Learned A.R. argued that the facility of inter-unit transfer of goods under EOU scheme has been restricted to manufactured goods only under paragraph 6.13, 6.14 of the EXIM Policy 2002-2007. It was argued that such inter-unit transfer of goods is different from the transfer of unutilized duty free goods allowed under paragraph 6.16 of the EXIM Policy. It was argued that such inter-unit transfer of goods to another EOU can be .....

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sion for jobwork was granted on 17.07.2002 and received by the head office on 17.07.2002. They stopped the inter unit transfer of material from that date. The adjudicator accepted the assessee s claim and considered the assessee had valid reasons for effecting inter unit transfer under para 6.16 of EXIM Policy. 6.4 From the facts of the case it can be seen that the show-cause notice clearly alleged that the permission to send goods on job work basis to the assessee was restored by Dy.Commissione .....

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ow-cause notice. These facts clearly establish that in spite of having restored job work permission on 09.07.2002, the assessee preferred to obtain CT3 certificate on 10.07.2002 and chose to send the inputs to another EOU on inter unit transfer basis on 12.07.2002, 16.07.2002 and 17.07.2002 without giving any valid reason for the same; which is a clear violation of the para 6.16 of the Exim Policy 2002-07. 3. Learned Counsel for respondent relies on the impugned order. He also submitted the list .....

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for renewal of job work permission. While the permission for job work was granted on 09.07.2002, however the respondent had not received the intimation of the same. In these circumstances, the respondent transferred the said material to another EOU under valid CT-3 certificate. It is argued that CT-3 certificate was also issued by the Revenue and the Jurisdictional Dy. Commissioner would have got a copy of the same. He argued that under these circumstances they have no option but to avail facili .....

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isposed of as under. 4.3 We find that the only objection of the Revenue is that there was no valid reason for transfer of material to another EOU. 4.4 It can be seen that it does not require existence of any valid reason for transfer of goods to another EOU. The objection of Revenue is based on the clarification of Circular No. 91/2002-Cus dated 20.12.2002, paragraphs 2 and 3 of the said Circular reads as under:- 2. The matter has been examined by the Board. It may be noted that the facility of .....

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on payment of applicable duties and on submission of import licence by the DTA unit, wherever applicable. The paragraph also permits transfer or sale of goods from an EOU/EPZ/EHTP/STP unit to another such unit. A plain reading of the paragraph makes it clear that sale of unutilised material to a DTA unit or to another EOU/EPZ/EHTP/STP unit can arise only in exceptional cases and cannot be a regular feature for the units. Such sale of unutilised goods is obviously different from inter-unit trans .....

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ver, in such cases, the unit should give valid reasons for such transfer/sale of unutilised materials. Such supply from one EOU/EPZ/EHTP/STP unit to another such unit shall be treated as import for the recipient unit and necessary endorsement to this effect may be made on all the documents pertaining to such inter-unit transfers. 4.5 Plain reading of the Policy suggests that only when such sale is meant for a DTA unit, valid reason is required. The para 6.16 (a) reads as under. Sale of Un-utilis .....

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on perusal of the impugned orders, in paragraph 7.3.2, while passing orders in the case the Commissioner had observed that:- 7.3.2. The assessee have explained that the order for the goods under import was placed when there was a subsisting permission for sending the raw-materials for jobwork outside e factory premises & on that understanding & promise the material was imported, which arrived on 8th June 2002 when both Notification 53/97 -Cus dated 03.06.97, Para 6.14 (b) & Para 6.1 .....

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