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2017 (4) TMI 790 - CESTAT HYDERABAD

2017 (4) TMI 790 - CESTAT HYDERABAD - TMI - 100% EOU - refund claim - rejection on the ground that the concept of cum-duty is not applicable to the DTA clearances made by EOUs - Held that: - Assessee made straight forward clearances from the EOU to DTA, though at lower rate of duty discharged thereon than what was applicable. It is not the case of the department that respondent-assessee had removed the goods clandestinely or that they had collected from or reimbursed by, the buyers, the amount o .....

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ssee. - E/COD/21159/2015, E/Stay/21160/2015, E/21996/2015 - A/30536/2017 - Dated:- 12-4-2017 - Mr. (Dr.) Satish Chandra, President And Mr. Madhu Mohan Damodhar, Member(Technical) Sh. Guna Ranjan, Superintendent (AR) for the Appellant Sh. Suresh Astekar, Advocate for the Respondent ORDER [Order Per: Madhu Mohan Damodhar] For the reasons stated in the application, the delay of 20 days in filing the appeal is condoned. MA (COD) is allowed. Since the appeal itself is taken up for hearing and decisio .....

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d obtained EPCG license and started paying central excise duty on the DTA clearances @ 12.36% as done by any other DTA unit. However, the lower authorities ordered that the respondent was liable to pay central excise duty in terms of the proviso to Section 3 (1) of the Central Excise Act. Accordingly, respondent-assessee made the payment of differential duty by calculating the total Central Excise duty @ 23.89% and paid the balance differential duty @ 11.53% on the clearances made during the afo .....

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nt was to be treated as cum-duty price in terms of Explanation to Section 4 (1) of the Central Excise Act, 1944. After due process of law, the refund sanctioning authority rejected the refund claim on the ground that the concept of cum-duty is not applicable to the DTA clearances made by EOUs. In appeal, Commissioner (Appeals) vide the impugned order filed by assessee inter alia held that cum duty benefit was very much available to them and that one year period of filing refund is not applicable .....

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e of assessment of customs duty has to be determined in terms of Customs Act, 1962. (b) Going by the provisions of Section 14 of Customs Act, 1962, the transaction value shall form the basis for assessing the duty, i.e. the sale consideration shall be the basis for calculating the duty. Further, in terms of proviso to Section 14 (1) supra, it can be seen that the transaction value does not include customs duty. Hence it is evident that there is no scope to calculate the Customs duty by consideri .....

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, 1944 and that the benefit of cum-duty price not available. 5. On behalf of respondent- assessee ld. Counsel Shri Suresh Astekar reiterated the correctness of the impugned order and also submitted a synopsis which can be summarized as under :- (i) The Revenue has contended in the present appeal that as per the proviso to Section 3 (1) of the Central Excise Act, the clearances made by an EOU into the DTA have to be subjected to the aggregate duties of customs and the valuation for the purpose of .....

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related to clandestine removal and in that context the Tribunal noted that the facts of the case were similar to the case of Sarla Polyester Ltd. Vs CCE Surat-II 2008 (222) ELT 376 (Tri.-Ahmd.) which also related to clandestine removal by EOU and wherein the Tribunal held that the cum-duty value was not applicable to clandestinely removed goods. 6. Heard both sides and have gone through the facts of the case. 6.1 Main contention of the appellant-Revenue is that the prices indicated in the invoi .....

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3 (1) of the Central Excise Act, 1944, according to which the duty payable on such DTA clearances would be the aggregate of the duties of customs which would be leviable under the Customs Act, 1962. Viewed in this light, we do not find any infirmity in the above conclusions arrived at by lower appellate authority. Proviso to Section 3 (1) of Central Excise Act provides measure of Central Excise duty leviable on DTA clearance by EOU notwithstanding the manner of its calculation. The fact that dut .....

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o to Section 3(1) is a legal fiction under which the goods manufactured by a 100% EOU and cleared into DTA are to be treated as goods imported into India. On perusal of the proviso, we find that what this proviso provides is a measure of central excise duty leviable on the DTA clearance of 100% EOU and this measure is the aggregate of the duties of customs on the import of like goods into India and if the rate of duty is ad valorem, duty is to be calculated on the value determined under the prov .....

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ances of a 100% EOU. Therefore, in our view, it would not be correct to treat the clearance of the goods manufactured by 100% EOU into DTA as deemed imports into India." The above Kumar Arch Tech decision has been relied/followed in a number of judgments namely 2015 (316) ELT 498 (Tri.-Ahmd.), 2015 (327) ELT 514 (Tri.-Ahmd.), 2015 (328) ELT 620 (Tri.-Del.) and 2016 (338) ELT 435 (Tri.-Ahmd.). 6.4 We also find that reliance of department on the case law of EON Polymers Vs CCE Jaipur 2010 (25 .....

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ly error committed by the respondent is that they paid duty at the rate of 12.36% on the DTA clearances which, much later, department directed them to pay at the rate of 23.89%. It is also not disputed that payment of duty, albeit at the lower and incorrect rate of 12.36%, was known to department since ER-2 returns were filed by the assessee throughout the period in question. 6.5 We also take note of the correspondence in OC No.32/2013 dt.14-03-2013 of the Range officer and reply dt. 22.3.2013 g .....

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n a subsequent decision of the Tribunal in the case of Asian Alloys Ltd. Vs CCE Delhi-III 2006 (203)ELT 252 (Tri.-Del.) where the Tribunal distinguished the clandestine removal from other types of DTA clearances. Even in the decision of Hon ble Supreme Court in the case of CCE Delhi Vs Maruti Udyog Ltd. - 2002 (141) ELT 3 (SC), which is relevant to this issue, the Apex Court inter alia held as under : "5. A reading of the aforesaid Section clearly indicates that the wholesale price which is .....

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is payable has to be excluded. The Tribunal has, therefore, rightly proceeded on the basis that the amount realised by the respondent from the sale of scrap has to be regarded as a normal wholesale price and in determining the value on which excise duty is payable the element of excise duty which must be regarded as having been incorporated in the sale price, must be excluded. There is nothing to show that once the demand was raised by the Department, the respondent sought to recover the same fr .....

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