TMI Blog2023 (6) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d got converted into a DTA unit, in the same premises and transferred all capital goods, raw materials, semi-finished goods and finished goods to the DTA unit. From the DTA unit, the finished goods were exported and the semi-finished goods were fully processed and also exported on payment of duty under claim of rebate of duty in terms of Rule 18 of CER, 2002. 2.3 While examining the rebate claims, it appeared to the Department that the assesse has not correctly paid the duty on semi-finished goods and finished goods at the time of de-bonding into a DTA unit. The assesse had discharged duty on semi-finished goods and finished goods by availing the concession rate of duty under Notification No. 23/2003-CE dated 31.03.2003. Further for arriving at the assessable value, the appellant had not adopted Rule 14 of Customs Act, 1962 in so far as the freight charges, insurance and landing charges were not included in the assessable value. 2.4 According to Department, a 100% EOU is governed by para 6.8 of Foreign Trade Policy for clearances into DTA whereas para 6.18 covers the procedure to be followed for exiting as EOU and conversion into DTA. The Foreign Trade Policy thus does not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present Show Cause Notice has been issued alleging that the exemption under notification 23/2003-CE is applicable only for DTA clearances as per para 6.8 of FTP and not for payment of duties while de-bonding as per para 6.18 of FTP. 4.1 Apart from this while in the SCN, profit margin of 20%, freight amount of 20%, insurance amount of 1.175% and landing charges of 1% were also proposed to be added to the assessable value. The Appellants then replied to the Show Cause Notice contending that they are entitled to avail concessional rate of duty as per notification No. 23/2003-CE because the phrase brought to any other place in India‟ is mentioned both in proviso to Section 3(1) and also in notification No. 23/2003-CE. If 23/2003-CE is denied, the levy is only under Section 3(1) and not under proviso to Section 3(1) in terms of the decision in SIV Industries Ltd Vs CCE 2007 (117) 281 (SC). However, the adjudicating authority confirmed the demand of duty on semi- finished goods and finished goods as per Show Cause Notice, but however dropped the proposal for inclusion of freight, insurance and landing charges. 4.2 The learned Counsel submitted that it is an admitted and un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE 2011 (270) ELT 554 and also the Circular 1/2004-Cus dated 05.01.2004. 4.5 The learned Counsel pointed out that the decision of SIV Industries (supra) was rendered, when the phrase in clause (b)(ii) of proviso to Section 3(1) earlier read as allowed to be sold in India . In the case of SIV Industries the Hon ble Apex Court held that the assessment of the finished goods lying in stock on the date of de-bonding must be made as per Section 3(1) and not as per proviso to Section 3(1) because de-bonding‟ cannot be equated with goods allowed to be sold in India‟. 4.5.1 The phrase allowed to be sold in India‟ was later substituted as brought to any other place in India with effect from 11.05.2001. In the case of Universal Ferro and Allied Chemicals Ltd Vs CCE 2020 (372) ELT 14 (SC), the Full Bench of Hon‟ble Supreme Court, while considering the consequential effect of substitution of the phrase allowed to be sold in India by the phrase brought to any other place in India , held as below: 55. We do not find that there would be any conflict in the amended provisions of clause (ii) of the proviso to sub section (1) of Section 5A of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurance, etc., in assessable value of finished goods, and semi-finished goods while de-bonding to DTA, the learned Counsel submitted that since proviso to Section 3(1) is not applicable, the valuation has to be done only under Sec 4 of Central Excise Act, 1944 and not under Section 14 of the Customs Act, 1962. That therefore the appeal filed by the department may be dismissed. 4.5.4 In regard to the allegation that credit has been wrongly availed on semi-finished goods and finished goods, the learned Counsel submitted that as duty has been paid on such goods which were later cleared for export, the credit is eligible. 4.5.5 The learned Counsel prayed that the assesse appeal may be allowed, by setting aside the duty, intrest and penalties imposed in regard to semi-finished goods and finished goods. It is also prayed that the credit availed of duty paid on semi-finished goods and finished goods may be allowed. 5. The learned Authorised Representative M/s. Sridevi Taritla supported the findings in the impugned order. 6. Heard both sides. 7. The moot point that arises for consideration is whether the assesse is liable to pay the demand of differential duty on the semi-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so 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. We do not find any grounds to take a different view. The goods having been exported, the differential duty demand cannot sustain. Ordered accordingly. It needs to be mentioned that though initially, the appellant had contended that the duty on semi-finished goods and finished goods is payable as per proviso to Section 3(1) availing the benefit of notification no. 23/2003, this claim was given up at the time of hearing. It is argued by the learned Counsel that the Apex Court in the case of universal Ferro and Allied Chemicals Ltd. (supra) held that the substitution of the words brought into any place in India‟ does not bring any change. That therefore 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. 11. The department has filed Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o read with Notification No. 23/2003 (DTA Sales) and hence the levy is under the CEA and the duty so paid is duty of excise. However, the rate of duty is not as specified in the first schedule to Central Excise Tariff Act but equal to the aggregate of customs duties leviable under the Customs Act 1962. In view of the absence of one of the ingredients, the credit of duty paid by an EOU at the time of de-bonding cannot be allowed under rule 3(1)(i) of CCR as it allows the credit of duty as specified in the First Schedule to the Central Excise Tariff Act 1985 only. Rule 3(1) of CCR 2004 do not specify under it the duty of excise paid which is equal to the duties of customs leviable under the Customs Act. Therefore I am of the considered view that the credit, of duty paid by an EOU on the goods manufactured by them, either in terms of the proviso to section 3(1) of CEA or in terms of Sl.Nos.2 and 3 of Notification No. 23/2003. Is not allowable under rule 3(1)(i) or under any other sub rule rule 3(1) of CCR 2004 and I hold so. 15. We have already concluded that the duty demand raised on the semi-finished goods and finished goods cannot be sustained for the reason that the goods hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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