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TMI Blog2025 (5) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... 001 with jurisdictional authorities. The appellants are availing the benefit of duty exemption under Notification No.52/2003-Customs and Notification No.22/2003-C.E., both dated 31.03.2003, as amended, for procurement of duty-free import and indigenous materials, respectively, for use in manufacture of finished goods to be exported by their 100% EOU. Further, the appellants have also executed B-17 Bond for undertaking to comply with the conditions of such notifications and for binding themselves to pay duty and interest on demand from the Department, in case of any failure of fulfilment of the said conditions. In these notifications, there is a provision that the finished goods, even if not exported are allowed to be cleared into Domestic Tariff Area (DTA), subject to certain prescribed conditions and limitations as mentioned in paragraph 3 of the said notifications. The appellants were procuring duty free imported raw materials as well as the indigenous materials by availing the aforesaid notifications and used such materials for manufacture of carpets. Such carpets were being cleared under "Served From India Scheme (SFIS)' under Notification No.34/2006-C.E. dated 14.06.2006. 2.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the impugned order was passed in confirming the order of the original authority, by rejecting the appeals filed by the appellants. Feeling aggrieved with the impugned order, the appellants have filed these appeals before the Tribunal. 2.4 The appeals filed by the appellants were earlier decided by this Tribunal vide Final Order No. A / 85091-85092/2022 dated 10.02.2022. In the said order, the Co-ordinate Bench of the Tribunal have held that Notification No.34/2006-CE dated 14.06.2006 was issued under Section 5A of the Central Excise Act, 1944 and since it does not provide for extending the benefit of duty exemption to goods manufactured by 100% EOU; consequently, the clearance of goods has been effected by the appellant without payment of applicable duties. Considering that the procurement of 'raw materials' - both imported and domestic - had been made without payment of duty, against notifications no. 52/2003-Cus. and no. 22/2003- C.E., both dated 31.03.2003 issued under Customs Act, 1962 and Central Excise Act, 1944, respectively, the Tribunal had upheld the confirmation of demands in the impugned order. 2.5 The appellants had preferred an appeal against the Final order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te submitted that demand of duty on inputs consumed in such final products, as claimed in the SCNs is not sustainable. In this regard, he relied upon the circular No. 973/7/2013-CX dated 04.09.2013 issued by the CBEC, wherein it has been clarified that the goods cleared by debiting the duty scrips by domestic manufacturers is not treated as goods exempted from duty and therefore there is no requirement for reversal of CENVAT credit. It is submitted by learned advocate that such clarification issued in the context of duty scrips issued by DGFT, shall apply to the present case inasmuch as the duty debited in the SFIS scrips at the time of clearance of carpets by the appellants, shall amount to payment of central excise duty thereon. 3.2 Learned Advocate has also submitted that the appellants continue to pay duty on the final products cleared in DTA, as in normal cases, the applicable duties shall be paid through payment by cash and in case of SFIS scrip holders, the duties debited in the SFIS scrips. He further stated that the Tribunal have been taking the consistent view that goods cleared in DTA by debiting the duties scrips is not an exemption from payment of duty. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of excise which shall be levied and collected on any excisable goods which are produced or manufactured (i) in a free trade zone or special economic zone and brought to any other place in India; (ii) by a hundred per cent export oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975)......" Notification No. 22/2003-C.E. EOU/STP/EHTP Units - Exemption to goods brought into - Notification Nos. 136/94-C.E., 1/95-C.E., 10/95-C.E., 37/99-C.E. and 37/2000-C.E. rescinded "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Ministry of Finance, Department of Revenue, No. 26/98-Central Excise (N.T.), dated the 15th July, 1998 or No. 46/2001-C.E. (N.T.), dated 26th June, 2001 or cleared to the warehouse authorised to carry on manufacturing process or other operation under section 65 of the Customs Act, 1962 (52 of 1962) and under the Manufacture and Other Operations in Warehouse Regulations, 1966, or cleared to the holders of certificate for duty free import from Apparel Export Promotion Council and Council for Leather Export as specified in paragraph 6.9(e) of Export and Import Policy, without payment of duty :...." NOTIFICATION NO. 52/2003-CUS. Dated 31.03.2003, as amended In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the said Customs Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts, - (a) all goods as specified in the Annexure-I to this notification, when imported or procured from a Public Warehouse or a Private Warehouse appointed or licensed, as the case may be, under section 57 or section 58 of the said Customs Act or from intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by debiting the scrips, instead of being paid in cash, in terms of paragraph 3.6.4.10 of the Foreign Trade Policy (FTP), which state that "utilisation of Duty Credit Scrip shall be permitted for payment of excise duty in terms of DoR notification issued in this behalf, for procurement from domestic sources of items permitted under Para 3.6.4.5.". From combined reading of the legal provisions of the Central Excise Act, 1944 and the relevant notifications issued therein along with FTP, it is found that payment of duty by utilising SFIS scrips, by debiting the same for an amount equal to such duty, has been treated as fulfilment of the obligation of an assessee/ the appellants 100% EOU, for payment of applicable duty. 8.2. In this regard we find that the learned Commissioner in deciding the issue of dispute in de novo proceedings have given his findings as follows. The relevant paragraphs of the said order is reproduced below: "15. Procurement of inputs duty free under Notification No.52/2003-CUS and Notification No. 22/2003-C.E. is not available if the end products are cleared for DTA sale at Nil rate of duty. It is the basic principle of exemption that the benefit of exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case also." 8.4 We also find that in the case of Universal Power Transformer Private Limited (supra), the Tribunal have also held that debits made in SFIS would not amount to exemption would be payment of duty. The relevant paragraphs of the said order are given below: "10. It is nobody's case that the functioning of SFIS certificate is different then the functioning of DEPB scheme. In DEPB scheme the exporters are issued DEPB which allow them specific amount to be utilized as customs duty, while the SFIS scheme, the service providers are issued SFIS certificate which allow them to import or procure indigenous goods without payment of duty by debiting the said script. This being the case, I find that the decision of the Hon'ble High Court of Madras having been affirmed by the Hon'ble Supreme Court, the ratio would clearly apply in this case also. 11. Accordingly, in view of the foregoing it is held that debits made in SFIS would not amount to exemption from payment of duty. I hold that the impugned order is liable to be set aside and I do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any." 8.5 We further find that in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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