Blue Mount Textiles Vs CCE (CESTAT Chennai)
CESTAT Chennai held that the demand of duty in respect of semifinished goods cannot sustain. Accordingly, the duty paid thereon is duly refundable.
Facts- During the year 2011, they intended to exit the EOU scheme. They obtained an ‘in principle’ exit permission from MEPZ, Chennai and then, worked out the duty incidence. The appellants, thus, remitted the duty on both imported goods as well as indigenously procured excisable goods and goods in the nature of finished and semi-finished goods produced and held as stock on the date of de-bonding of the unit. Subsequently, they submitted a letter to the Department along with work-sheet and payment details with a request to issue ‘No Due’ Certificate in the matter. After verification, ‘No Due’ Certificate was issued and subsequently, the Final Exit Order was issued to the appellants.
The appellants then filed refund claim on the ground that they had paid an excess amount of duty. The plea on the part of the appellants was that they are eligible to pay duty on the manufactured items only as per Sl. No. 2 of Notification No. 23/2003-C.E. dated 31.03.2003. It was thus contended that they are only liable to pay the duty on the manufactured items as per the above Notification at the rate of 50% of the Basic Customs Duty (BCD) to arrive at the aggregate dues. However, the Range Officer, Mettupalayam Range, directed them to calculate the Basic Customs Duty without considering the method stipulated in Notification No. 23/2003-C.E. dated 31.03.2003. In such circumstances, they have paid the excess amount of duty.
After due process of law, the refund sanctioning authority rejected the refund claims observing that the tax paid by the appellants are correct and that there is no excess payment to be refunded. In appeal, the Commissioner (Appeals) vide orders impugned herein upheld the same. Hence, the appellants are now before the Tribunal.
Conclusion- In the case of M/s. EID Parry India Ltd., the Tribunal held that the demand of duty in respect of semifinished goods cannot sustain. The Tribunal followed the decision in the case of M/s. Tirumala Seung Han Textiles Ltd. v. C.C.E., Hyderabad [2009 (237) E.L.T. 145 (Tribunal – Bangalore)] to set aside the demand.
After appreciating the facts and following the ratio laid down in the decisions, we are of the view that the rejection of refund is without any legal or factual basis.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The issue involved in all these appeals being the same, they were heard together and disposed of by this common order.
2. Brief facts of the case are that the appellants herein were 100% Export Oriented Unit (EOU) for the purpose of manufacture of excisable goods. They procured imported capital goods and raw materials without payment of duty under Notification No. 52/2003-Cus. dated 31.03.2003 and procured indigenous excisable goods (capital goods, spares, raw material, fuel, etc.) without payment of duty under Notification No. Notification No. 22/2003-Central Excise During the year 2011, they intended to exit the EOU scheme. They obtained an ‘in principle’ exit permission from MEPZ, Chennai and then, worked out the duty incidence. The appellants, thus, remitted the duty on both imported goods as well as indigenously procured excisable goods and goods in the nature of finished and semi-finished goods produced and held as stock on the date of de-bonding of the unit. Subsequently, they submitted a letter to the Department along with work-sheet and payment details with a request to issue ‘No Due’ Certificate in the matter. After verification, ‘No Due’ Certificate was issued and subsequently, the Final Exit Order was issued to the appellants.
3. The appellants then filed refund claim on the ground that they had paid an excess amount of duty. The plea on the part of the appellants was that they are eligible to pay duty on the manufactured items only as per Sl. No. 2 of Notification No. 23/2003-C.E. dated 31.03.2003. It was thus contended that they are only liable to pay the duty on the manufactured items as per the above Notification at the rate of 50% of the Basic Customs Duty (BCD) to arrive at the aggregate dues. However, the Range Officer, Mettupalayam Range, directed them to calculate the Basic Customs Duty without considering the method stipulated in Notification No. 23/2003-C.E. dated 31.03.2003. In such circumstances, they have paid the excess amount of duty.
4. After due process of law, the refund sanctioning authority rejected the refund claims observing that the tax paid by the appellants are correct and that there is no excess payment to be refunded. In appeal, the Commissioner (Appeals) vide orders impugned herein upheld the same. Hence, the appellants are now before the Tribunal.
4.1 On behalf of the appellants, Learned Counsel, Shri S. Durairaj, appeared and argued the matter. He submitted that during de-bonding, the appellants had paid the Customs and Excise Duties as if the goods are cleared under DTA, under protest, as directed by the Revenue on the semi-finished goods, work-in-progress and finished goods; however, the appellants are liable to pay duty, as per Sl. No. 2 of Notification No. 23/2003-C.E. Thus, the appellants had made payment of an excess amount. The appellants had therefore claimed refund of 5% excess Basic Customs Duty (BCD) so paid by them, but the same was rejected by the authorities below. The difference in the method of calculation of duty between the appellants and the Revenue was furnished by the Learned Counsel for the appellants, as below:-
