The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed central excise demand on debonding of 100% Export Oriented Units (EOU) to Domestic Tariff Area (DTA).
The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) while remanding the matter directed the adjudicating authority to give the letter to the appellant well in advance and to grant an opportunity of hearing before passing reasoned order in the matter.
The appellant/assessee is engaged in the manufacture of agrochemicals. On 24-12-2012 the appellant, then 100% EOU, sought permission from the central excise department to convert the 100% EOU into DTA. The department issued ‘no dues certificate’ on 16.01.2023 basis which Deputy Development Commissioner, Kandla issued ‘final exit order’ on 15.02.2013.
Subsequently, during the department audit in December 2013, preventive officers were called for verification of quantum of finished goods on cutoff date of EOU and during the said inquiry statements of office bearers of appellant were recorded.
Upon concluding inquiry, a show cause notice dated 17.12.2013 was issued demanding central excise duty of Rs. 5,75,13,596/-, alleging that the appellant has not paid the duty on finished goods lying in their EOU unit on the cutoff date of debonding and by virtue of the said act the appellant has contravened para 6.18 of Foreign Trade Policy read with appendix 14-I-L of the Hand Book of Procedures which requires for payment of customs and excise duty on debonding.
The assessee contended that the department has wrongly considered the goods lying in WIP stage as finished goods. He explained that the goods manufactured by the appellant are a wide array of agricultural and environmental science products including organic chemicals and other chemical products which do not reach the finished product stage unless mandatory quality checks are carried out. Since without completing the quality check, the said goods are not marketable, they are out of purview of Section 2(d) which defines ‘excisable goods’.
The tribunal held that the matter needs to be reconsidered by the Commissioner/adjudicating authority by providing the letter issued by the jurisdictional Assistant Commissioner to the appellant; and considering the CA certificate dated 15.11.2016 to ascertain claim of export of goods, along with other evidence which may be put on record by the appellant.
Case Details
Case Title: Bayer Vapi Pvt Limited Versus Commissioner of C.E. & S.T.-Vapi
Case No.: Excise Appeal No. 11078 Of 2017-DB
Date: 26.11.2024
Counsel For Appellant: Jitendra Motwani
Counsel For Respondent: Mihir G Rayka
